If January’s tax return payment deadline is worrying you, it could be time to speak to HMRC about their Time To Pay arrangements.
As you have heard many times this year, the current situation is unprecedented. Many business owners who normally manage payments easily, have seen income dramatically fall.
Some freelancers and self-employed workers are facing big issues, especially if they have taken advantage of deferring July’s payment on account. Using the HMRC online tool you could arrange to pay your liability by direct debit over the year 2021.
But, just like July’s extension, delaying payments could end up with you facing a bigger bill. Our advice is not to put off the issue until January 2022.
If you are having difficulty paying your self-assessment tax bill, then you can use the HMRC Time To Pay (TTP) scheme. The sooner you approach HMRC the better as our experience is they welcome you being upfront. Don’t wait until they’re writing to you next year.
What is the TTP scheme and how does it work?
Who qualifies for HMRC Time To Pay?
You are qualified to set up a payment plan online to spread the cost of your latest self assessment bill if you owe £30,000 or less.
You must not have any other payment plans in place or debts with HMRC and your tax returns must be up to date. The outstanding amount must be less than 60 days after the payment deadline.
TTP arrangements with HMRC are based on an individual’s specific circumstances. There is no standard timescale due to the individual agreements. HMRC looks at what you can afford to pay based on an income and expenditure assessment.
Following the assessment, they work out the best plan for you. HMRC would typically expect you to pay no more than 50 per cent of your disposable income.
The agreement can be amended over time if your income changes or if you received a windfall such as inheritance. HMRC says that in 90 per cent of cases, pay arrangements are successfully completed.
During your conversation or using the online tool with HMRC, you’ll need the following details:
- The reference number relating to the bill that is being discussed
- Details of the amount of tax that you cannot pay
- Information about your current financial issues
- Your bank account details so you can set up your direct debit for your arrangement.
What if I miss my payment plan deadlines?
It’s very important that you try and meet your payment plan deadlines with HMRC. But if , for whatever reason you can’t, they’ll be in touch to ask why payments have bounced.
Attempts will be made to renegotiate the arrangement, but if that doesn’t work out, you could get a visit from an HMRC field force officer. In the worst case scenario, you could end up with county court proceedings or insolvency.
Again, our advice is to keep on paying as per your agreement, but if something unforeseen happens, speak to HMRC immediately. Although the tax authorities get a bad press, they are willing to help, especially at the moment as they understand how difficult things are.
If you need help with your self-assessment, you can contact us today