PAYING TAX DEBTS – a checklist and guide

Paying tax debts
Dealing with tax liabilities can be a challenging and stressful situation.

Here are some tips to assist you. If you would like some additional assistance, please get in touch.

Key Points

Initial checks to undertake

  • Is the tax debt demanded by HMRC correct?
  • Is the debt enforceable?

Reviewable actions

  • Can an appeal be lodged against the tax assessment generating the liability?
  • If the liability is incorrect can a return be amended, or an overpayment claim be made?
  • Can any additional claims be made to reduce the liability?

Remission of the debt

It must be requested by the taxpayer. It is only granted in highly exceptional cases where there is severe hardship, no assets or it is unlikely ever to be paid. Often illness and age are key factors. Note that the debt is not written off but put on hold.

Information needed to support a time to pay request

  • The details of current and future income and expenses.
  • For a business – management accounts and cash flow analyses.
  • The details of assets and liabilities.
  • Details of saleable assets.
  • Third party finance options – including evidence of attempts to get finance if rejected.
  • Any anticipated cash inflows due in the future with supporting documentation.
  • Any tax refunds due or anticipated.
  • The details of future and ongoing tax liabilities.
  • A realistic time to pay proposal within the available means and supportable. (See below)

Agreeing a time to pay arrangement

  • Make contact with HMRC as soon as possible.
  • Collate the relevant information (as detailed above) as far as possible before any call.
  • Prepare a reasonable and manageable time to pay proposal.
  • Include any upfront lump sum payments which can be made in the time to pay.
  • Try and agree the time to pay ahead of any due date for the tax lability concerned to avoid penalties or surcharges.
  • If the time to pay is agreed and subsequently, payment difficulties arise – make contact with HMRC immediately.

If no time to pay can be agreed, consider making payments to reduce the debt and it may allow discussions to restart.

HMRC’s time to pay guidance can be found at:

https://www.gov.uk/guidance/find-out-how-to-pay-a-debt-to-hmrc-with-a-time-to-pay-arrangement

Contact us if you would like some assistance in a tax debt related matter.

 

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