late payment of income tax(self assessment

optimistica

My payment on a/c was due on 31st July;I can only pay this in full by drawing funds from my offset mortgage a/c so for the moment have pd about a quarter of the amount due. I know I will be charged interest by HMRC but I believe that is 2.5% and that is considerably less than the amount I am paying on my offset mortgage. I don't want the hassle of going thru my assets/outgoings with HMRC to see if they will grant a concession under their "Business Support" scheme; but other than charging interest will HMRC levy any surcharge? Or so long as I pay in full, say by the end of next Jan will I just be incurring interest. Are they likely to take legal action against me in the meantime?Hope someone can enlighten me on this. Of course the official HMRC website says the payment dates are 31st July/31st Jan, but what actually happens if you don't pay in full by those dates?

fengirl_2

If you dont pay in full by these dates and do not come to a payment arrangement, then HMRC will assume you are not playing ball and will begin legal action.

bubblegumcola

Had a quick look on their website, it says you will be charged interest if you still haven't paid within 28 days of the deadline then they will add on a 5% surcharge on top of what you owe. I presume if you still don't pay there will be legal proceedings. Its really in your best interests that of you cannot pay the full amount due to contact them and tell them in advance, so an arrangement can be put in place. I don't think you will avoid paying any charges.

I know its a struggle to pay, my DH is self employed and we struggled to get the money together but somehow we managed. You can now set up a direct debit so you can pay monthly in advance or if you don't want to do that have a separate bank account and don't touch it til you have to pay them. ( Easier said than done cos we always end up having to use some of it.)

silvercar

Had a quick look on their website, it says you will be charged interest if you still haven't paid within 28 days of the deadline then they will add on a 5% surcharge on top of what you owe.

Are you sure that is for late payment and not for late submission of your tax return?

4Chickens

Hi all

My hubby is self-employed and this used to be huge problem for us. We set up a tax a/c at the bank and put money away every month, then we raided it. So now we send a cheque to the tax office every month. In fact we overpay it so that we don't have to make payments in June, July, Dec and Jan. We have been doing this for the last couple of years and so far it is working well. optimistica, the hmrc will surcharge you for every month you are late paying/submitting. Whilst you are late paying the 31 July payment on account it will cause a roll on effect for you and you will probably be in a worse situation when your 31 January payment is due. Draw the money down, get it paid and start budgeting for a tax payment every month, this is the best way. What you may think you are saving on interest but you will lose that and more in fines and surcharges (how do you think the boys at hmrc pay for their duck houses?;))

BoGoF

First of all there will be no sucharge at present on your payment on account for 2008-09 so the only thing to worry about at present is the accruing interest. (the 28 days deadline would only apply to 07/08 unpaid tax). Depending on the level of the amount owing you may only get a couple of warning/reminder letters but given the huge level of debt HMRC has to try and collect there main focus attention is the bigger debts. So assuming we're not talking 10's of thousands then as long as you clear it within 3/4 months then you should be ok.

Remember the POA is based on the previous years tax so if it's not been such a good year then get them reduced. Better still get your 08/09 Tax Return in asap so you know exactly what you are due now and in January 2010.

SPLAT_2

I've had a bad couple of years starting from last may (work rapidly dried up, Im a carpenter & joiner and have been self employed for 20 years) so i dipped into my tax savings to pay bills and couldn't pay the £2700 tax bill in january, so phoned up local tax office and told them the truth my bills are larger than income at the moment, I wasn't asked to show them any proof of outgoings, and they agreed to let me pay £150 a month until 23/10/2010, this july's tax came in £550 and financially still no better off so they allowed me to tack this and this coming january's £737.00 on to direct debit at just under £340 a month, they would have accepted less but i really want to pay them off and hope work picks up, the interest if it runs the full period is around £300. i didn't phone up till after the payment date had well and truly gone, burying my head in the sand hoping things would pick up, which they didn't and found the staff really helpful, but DO NOT! i repeat DO NOT! phone in the morning the staff are real grumpy and will demand full payment no deals, if you can't pay were sending the boys round etc, I found this out the hard way and its really depressing when you've got less than nothing in the bank, no job in sight and some office wallah giving you a hard time because the country is in recession and its your fault you cant save money cause you cant get work and WHAT ARE YOU GOING TO DO ABOUT IT!! So i found its best to phone around 4pm, i think it may be near the end of their shift and the staff have always been very helpful then and given me some real constructive help. Hope this has been useful.

Elaine_Wilson

As others have said the surcharge on this will only kick in at the end of February next year.

I agree with BoGoF that you can probably make it through to January before the pressure gets too heavy. But expect a phone call about it, probably at an inconvenient time like Sunday lunchtime. In any event you need to pay before any actual legal action is taken to avoid extra charges so make sure you know the timescale for drawing down the money.

Are you happy you will be able to make the balancing payment (if any) and next year's interim at the end of January?

The collection department can be a right pain (it is, after all, their job) so calculate how much extra interest you would pay on your mortgage instead of borrowing from the government. Is the mount really worth the hassle?