Tax due 'on account'

sieve

Hi all,

Hope everyone is fine on this lovely sunny day!

As most of you will know I am going BR on April 8th. My biggest creditor is HMRC and this comprises about £6k VAT from mid 2008 until Mar 31st 2009, and £5479 self assessment for tax year 2007/2008 which became due 31st Jan 2009. However on my return, I also have a further £2739 which became due 31st Jan 2009 for "1st payment on account due for year 08/09" and I have a further £2739 due on 31st July 2009 which will be the second payment on account due for year 08/09.

My question is - will my BR cover all of these debts or will it only cover the £5479 and the first £2739? As in theory the £2739 due in July will have been incurred after my BR date?

If anyone could advise please that would be great.

Many thanks!

S

affluenza

No idea, but they are REALLY helping small businesses aren't they!

That will probably happen to me as well :eek:

sieve

affluenza wrote: »

No idea, but they are REALLY helping small businesses aren't they!

Oh yes you know it!!! :rolleyes:

lemma1968

All your outgoings will be controlled by the OR won't they?

The HMRC can't have what you don't have. I think you should speak to the OR speedily or speak to Nation Debt helpline, they may know the answer.

sieve

lemma1968 wrote: »

All your outgoings will be controlled by the OR won't they?

The HMRC can't have what you don't have. I think you should speak to the OR speedily or speak to Nation Debt helpline, they may know the answer.

Yeah this is true I guess as payment on account covers what you should already be earning - I guess the reason I'm asking is based on the fact I am accounting that I will be saving £500 in tax per month and if I don't, I'll likely have a big surplus that will mean a stonking IPA...

So as strange as it seems I hope they let me just carry on normally with my tax as that'll mean I may not get an IPA and be free of it in a year.

nervousmother

The payments are for the 08/09 tax year so will be included in your BR this is because the tax relates to a period before you became BR and is a proovable debt. you will have to find the money for the 09/10 tax year as that is after your BR date. You need to put your tax aside on a weekly/monthly basis for the upcoming year as this tax MAY go to the OR instead of the IR, a bit like employees having a NT tax code and paying to moonbeever.

fiveyearplan

Will you be carrying on in the same business? If not then I don't see how that would become due.

sieve

Thanks nm and 5yp. I have already budgeted to set aside £500 a month for tax purposes, I guess as you say it is largely irrelevant as it will either just go to the tax man as planned, or not and into an IPA instead. I guess I should be wanting the OR to say it should go into an IPA as it will save me some money but to be honest I'd rather pay it to the tax man if it means I can escape an IPA.

5yp yes I intend to carry on trading as I am now - obviously under the same name - all depends on whether the OR wants a piece of it I suppose...

Cheers

S

Ballymackeonan

It depends on how your business has been doing - if there were significantly less profits in 08/09 you can apply to the Revenue to reduce payments on account, since they're based on half the tax you paid in the previous year. Try to get a reasonably accurate idea of what the tax bill should be, and then apply to reduce the payment on account to reflect this.

Only one warning - if you underestimate, you'll be charged interest on the balance, which is why you need to have an idea of what your tax bill will be!

sieve

Thanks Ballymackeonan.

The business is continuing at pretty much the same level as it has done compared to the previous year, going by the amount that the VAT returns are for. I know that's not a cut and dry indicator but I think it's a pretty good one so am basing it on that - profit might have increased £1k-ish since the last return so nothing major.

Thanks for the tip though, big big help

startagain_2

Don't know nuffink about these matters - just wanted to say hello to you sieve!

SA