Prevent Late Payment Penalties With A Time To Pay Arrangement
For those seasoned Self Assessors the 31 January deadline will be all too familiar. This is when your tax return is due, along with your balancing payment and the first payment on account for the current tax year (if applicable).
You may not be so aware, however, of the late payment penalties that are imposed should any tax remain unpaid at 30 days, 6 months and 12 months after the 31 January payment deadline. The penalty is 5% of the tax outstanding at that date. So, for example, if any of your 2013-14 tax payment remains unpaid at 28 February 2015, 31 July 2015 and 31 January 2016, penalties will be imposed at each of these dates, at 5% of the tax outstanding.
These penalties can be avoided if you contact HMRC prior to the date on which they are imposed, and agree a ‘time to pay arrangement’ with them. The time to pay arrangement must be agreed and in place in order for the penalties to be suspended. Late payment interest, however, cannot be prevented and will accrue until the tax bill has been settled.
So, if you find yourself unable to pay your tax, then a call to HMRC before the tax becomes due could save further self-assessment debt. The number for the HMRC Business Payment Support Service is 0300 200 3835.
For further information please contact Green & Co.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
Image courtesy of FreeDigitalPhotos.net