I have a big TAX problem right now - Advice needed...

Private_and_Confidential

My accountant has just emailed me with the tax I owe for 2008/2009 and it's £2468. I'm also expected to pay 50% towards 2009/2010 tax so in total by 31st January 2010 I have to pay £3701.

Foolishly, I haven't made any provisions for tax for either 2008/2009 or so far for 2009/2010 so right now I have no idea of how I can pay this - In fact, I'd go as far as stating that I can't pay this.

What should I / can I do? I'm a bit scared right now.

Thanks for any advice.

reddevilled

I would start saving straight away - work out how much you can realistically save by then and then call the HMRC and explain the situation.

They'll probably still charge interest on anything paid late but they tend to be a lot nicer to people who explain their situation in advance.

morgani

As reddevilled has stated you need to phone HMRC. They have a relatively new policy for dealing with those who cannot meet there tax, NIC etc. You should not incur additional charges for late payment just interest. You could even start paying now to avoid spending the money if that is going to be a problem.

See this link http://www.hmrc.gov.uk/pbr2008/business-payment.htm

Best of luck with everything.

Rolo_Tomasi

First of all, as you are obviously self employed so you should check with your accountant that you have claimed everything you are legitimately entitled to.

If you have, then as mentioned previously you are best to contact the Revenue sooner rather than later to discuss a payment plan but remember that you will also have a payment on account to make on 31 July 2010 of £1234 and they will probably want to include this in any agreement.

You can apply for the payments on account for 2009-10 to be reduced if you think your earnings this year are less than last year. You can even reduce them to zero if you do not think there will be a tax liability. However if you reduce them by too much interest will be charged on any underpayment.

Finally the Revenue do accept credit cards now (subject to a 1.25% charge) so you could apply for a 0% card and pay this off over a period of time.

Hope this helps.

emilyjayne_3

Call us :-)

We will help, However you cant call the Bussiness payment support line (See Morgani's post) yet as your tax is not due in the near future.

Call th SA helpline & make sure you start MAKING PROVISIONS NOW ! And you can start paying now, which sounds like a good idea :-)

If you leave it till after the due date surcharges etc will be applied.

Hope this helps x

zygurat789

The 50% of 2009/10 of £3701 is only on account of the eventual liability. It may be more if your taxable profit increases, use this additional income to save.
It may be less so if your sales decrease you may be entitled to a reduction but you will need to have your accounts ending in the year 6/4/09 to 5/4/10 prepared at least in draft form. You can elect to reduce your 2009/10 but don't do this unless you are sure your profits have reduced as they will charge you lots of interest.

bubblegumcola

Didn't your accountant advise you to set up a separate account and to put money in it every month for your tax and don't spend it!! I know its easier said than done, we find it difficult to do as well. Definitely contact the Inland Revenue as soon as possible to explain you may have trouble paying your tax bill, they will be far more sympathetic if you tell them before its due.

If you are finding it difficult to save any money towards tax then you need to look at your personal spending, bills, luxuries, etc and try to make cutbacks which is what we have had to do. Your accountant could go through it with you. Also keep your bank card for your tax saving money at home and that way you aren't tempted to spend any of it. By the looks of your bill you should be putting away £500-£600 every month to cover it.

James_Trimby

As mentioned above check that the payment on account is okay. If results look worse for the next year you can apply to reduce the payment on account. IF your guess wrong you will get charged interest BUT as long as reasonable no penalties so I would look into this.

Before the help lines, note that the £2468 is due 31 January 2010 so you have some time to save. IF not paid by 28 February 2010 penalties will start to be charged so, unless you can do a deal, that is your target date.

Re the payment on account. Interest runs from 31 January BUT penalties do not apply until much latter so it is this amount (and similar falling due 31 July 2010) that would be better to negotiate with. Interest from the Revenue is not high so all you need to stop is knocks on doors and angry letters/calls.

good luck