Following on from the previous article, we thought readers might be interested in the consequences if they fail to pay their Self Assessment tax on time.
If you are facing cash-flow issues, and cannot see how you can afford to settle part, or all of your tax payment due 31 July 2017, what is the best strategy to avoid confrontation with HMRC and minimise any penalties and interest charges?
Firstly, let’s take a look at penalties. The trigger dates for penalties are 30 days, 6 months and 12 months after the tax became due for payment. On each of these trigger dates you will be charged a 5% penalty based on the amount of tax outstanding.
The current interest charge on unpaid tax is 2.75%.
If you are concerned that you may not be able to meet your liabilities as they fall due, and in particular, any payment due 31 July 2017, we recommend a two-pronged approach.
- Firstly, make a realistic estimate of when you can settle amounts due. This may be instalments or payment in full at a time after the due date.
- Secondly, call HMRC’s Business Payment Support Service on 0300 200 3835, and agree an extended payment scheme with them. Generally speaking, they will agree as long as your suggested scheme clears any outstanding liability before your next liabilities become due for payment. They will also exhort you to gather funds such that you can settle future tax on the due dates.
What is inadvisable, is to bury your head in the sand and wait for the brown envelopes, telephone calls and debt collectors at your front door. Call the help line before the tax falls due and keep to your agreed settlement plan.
Here at Jones Harris our office systems enable us to complete annual accounts quickly and therefore we are able to provide calculations of how much tax our clients will be required to pay in a timely manner, giving them time to be allocate the money. If you aren’t already a client and you’re struggling with any aspect of your annual accounts – be that their completion or the timescale in which it is done – then by all means get in touch for a no-obligation chat about how we can make things better for you.