Written by Huw Moseley, Director at Link Accounting Ltd
You’ll have no doubt heard the HMRC phrase ‘tax doesn’t have to be taxing’; but speaking with a few new clients recently about liabilities, deadlines and penalties, we know that Self Assessment can in fact be very taxing for many directors, self-employed people and rental property owners. It takes time to submit your returns, and when payment deadlines roll round so long after filing – making sure you have the funds available and remembering to settle up on time can sometimes slip your mind.
Hopefully you’ll have read my last blog and know that the second Payment on Account deadline is looming and you’ll have scheduled the full amount for payment on or before 31st July. But what will happen if cash-flow issues mean that you’re not in a position to pay Self Assessment tax on time?
Firstly, don’t panic. If you cannot settle part or all of your tax payment due 31 July 2017, there are ways to minimise penalties/interest charges and avoid any confrontation with HMRC. Here are 3 things to consider:
- Liabilities – it is important that you understand your liabilities, and inform HMRC when you expect to be able to settle all outstanding payments.
- Penalties – you will be charged a 5% penalty on any unpaid tax 30 days, 6 months and 12 months after the payment deadline.
- Interest – you will also be charged 2.75% interest on any unpaid tax.
HMRC has a helpful team in place to walk you through the process of extending your payment scheme so either give them a call, or we can contact them on your behalf. We can also look at your cash-flow and work out how you can settle future tax on the due dates so that you don’t have to worry this time next year.
If you’d like to take the ‘taxing’ out of all things tax – give me a call. I’ll be happy to discuss how we can help ease the burden.