What to do if you can’t pay your corporation tax

If you fear you are falling behind on your tax payments, the HMRC can help

If your business is facing temporary financial difficulties and you’re finding it difficult to keep up with your tax payments, it is better to look for help than to risk the wrath of the taxman. Don’t wait until the payment is overdue.

There is help out there: HM Revenue and Custom’s (HMRC)Business Payment Support Service makes it possible for cash-strapped businesses to stay on top of their tax payments by spreading them over a period of time. It’s been created especially for businesses and self-employed people who are unable to pay their tax due to short-term financial trouble.

Who to contact and what you will need to do

If your tax payment is due

If your tax payment is due now or in the near future and you cannot afford to pay, all you need to do is call HMRC on their payment support line 0300 200 3835. Lines are open from 8am to 8pm weekdays and weekends 8am to 4pm, excluding bank holidays.

You will need to provide:

• Your tax reference number
• The name of your business and your business address
• Details of the taxes you are concerned about
• When you expect to be able to pay the bill
• Details of any repayments you are currently receiving or may receive from HMRC

The sooner you get in touch, the sooner HMRC can begin working towards a solution. HMRC will ask questions about your income, expenditure and your assets and for more complicated cases they may ask for documentary evidence.

In most cases you will get a decision and a ‘time to pay’ agreement where they will encourage you to set up a Direct Debit payment plan over the phone. Schedules for payments you owe on income tax, national insurance and corporation tax, as well as VAT and PAYE, can be set up within 10 minutes. For larger organisations with more complex affairs, the HMRC should return to you within four working days.

If you fail to make the agreed payments or fail to register you tax affairs, HMRC will cancel the ‘time to pay’ arrangement and take legal action to recover the outstanding amount. If you don’t pay what you owe HMRC can legally offset any repayment due to you during this arrangement against the HMRC debt.

Even if you cannot pay your tax payment you must send any returns in on time as late returns may incur penalties.

If you have already been contacted by the HMRC about overdue tax payments, it is best to call the office that originally contacted you. NB: You can still ask HMRC to consider a payment arrangement even if they contact you first.

If your tax payment is not yet due

If your tax payment is not due yet, you can call HMRC’s support service nearer the time once you know whether you are able to pay or not. It is vital that you get in touch with HMRC prior to the payment deadline date so don’t wait until the payment is overdue.

Read more on what Corporation Tax is, how it is calculated and when your small business will you have to start paying it?

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