What if you can’t pay your tax bill on time?

Our experts explain the best way to deal with finding yourself unable to pay your taxes on time

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

What should you do if you can’t pay your tax bill on time?

We know how stressful it can be when you owe money to HMRC but you just can’t pay it, but the worst thing you can do is bury your head in the sand and hope it all goes away. HMRC recommend that you contact them as soon as you know you can’t pay and you will certainly find them to be more sympathetic if you do this rather than forget about it and hope it all goes away. You will have to pay interest if you can’t pay on time, but if you contact HMRC as soon as possible, you might avoid having to pay any penalties on top of that interest.

If you know you can’t pay before the deadline, contact the HMRC Business Payment Support Service – this service is for anyone who can’t pay, not just businesses.

You can contact the Business Payment Support Service on 0300 200 3835 and lines are open from 8am to 8pm Monday to Friday and 8am to 4pm on Saturday.

If you are the nominated partner in a business partnership, you may be able to negotiate time to pay on behalf of the partnership or the individual partners.

What happens if you have already missed your payment date?

If you have already missed your payment date and have received a payment demand, such as a tax bill or a letter threatening legal action because of your failure to pay your tax bill, you need to contact the HMRC office which sent you the letter as soon as possible. If you haven’t already received a bill or letter yet, contact the Business Payment Support Service as already mentioned.

If you are registered for Self Assessment and you have missed your payment date, you need to call the Self Assessment helpline on 0300 200 3822 as soon as possible. Lines are open from 8am to 8pm Monday to Friday and 8am to 4pm on Saturday.

What information do you need before you call?

Make sure you have the following information to hand before you call so that HMRC can deal with your situation as efficiently as possible:

  • Your reference number (this might be your VAT number or your 10-digit Unique Taxpayer Reference)
  • The amount of the tax bill you are having difficulties paying and the reasons why you are finding it hard to pay
  • What you have done to try to get the money to pay your tax bill
  • How much you can pay immediately and how long you will need to pay the remainder
  • Your bank account details

What happens when you call HMRC?

When you call, HMRC will ask you lots of questions to try to determine the state of your finances and how quickly you are going to be able to clear your arrears.

They will ask you about the following:

  • Your income and expenditure (your financial incomings and outgoings)
  • Your assets (such as savings or investments)
  • What action you are taking to get your tax payments back on track

HMRC will then make a decision as to whether you should be able to pay your tax bill immediately or whether you will need more time to get your payments back on track. If they decide you need more time to be able to clear your arrears and get your payments back in order, they may ask you further in-depth questions to find out how long it is likely to take you. They may even ask for evidence in complex cases before they make a decision.

What happens next?

If HMRC think you can pay immediately then you will be expected to do just that – pay up immediately. You can make that payment by direct debit or debit/ credit card over the phone. If you choose to pay by credit card you will charged a fee which is non-refundable, but be warned that HMRC phased out the use of personal credit card payments in January 2018.

If HMRC think that you need extra time to pay your tax bill, they may either allow you extra time to pay or allow you to pay in instalments by direct debit.

If HMRC genuinely believe that, even though you can’t pay right now, you will be able to in future, they may offer you extra time to pay. With the help of HMRC, you will set up a plan to pay in instalments by direct debit and HMRC will tell you the dates they want you to pay on. It is very important to keep up to date on these payments – if you don’t, HMRC will cancel their agreement with you and take legal action straight away instead.

If your circumstances change and you think you can clear your arrears faster, you must tell HMRC.

You will have to pay interest on the amount of tax you pay late.

What if you don’t get more time to pay?

If HMRC believe that you won’t get your payments back on track with extra time, they won’t make an arrangement with you and will instead expect you to pay up straight away. If you fail to do this, HMRC will start enforcement action to get the money from you – that action could take a number of forms. It might mean that they collect what you owe through your earnings or pension or they ask a debt collection agency to collect the money on your behalf. They might also make you bankrupt, force you to close your business or instruct bailiffs to take your belongings to sell.

Can you appeal this decision?

Unfortunately not. You can only appeal HMRC decisions in certain circumstances and this isn’t one of those circumstances. You do have the right to make a complaint if you are unhappy at the way you have been treated by HMRC though.

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972.

This page was last updated on 25/10/2018.

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