Tax bill i can not pay help please

simond503

Hi i have just recieved my tax bill and it is 5k which is 5x more than usual and it is correct. the rent on my shop is due 2 feb at £2500 i have this. all my earnings and my wifes earnings go on our 60k debts, thats why there is not any money for the tax man. should i give the tax man the 2500 and lose my business or 2500 for the rent and none for the tax man and see what happens. there will be another 2000 due in july which is 7000 total. our earnings do not cover all this. any help please simon

*MF*

Hi ..

First a recent article on the subject of tax deferral.

http://www.telegraph.co.uk/finance/yourbusiness/7072600/Self-assessment-tax-deadline-set-to-strain-HMRC.html

And some details here:

http://www.hmrc.gov.uk/budget2009/bus-payment-support-582.pdf

I have no personal experience of this subject, if you have an accountant, perhaps they could advise.

Hope this helps ...

MyopicMoo

I think that tax is one of those debts that need to come before unsecured, non-priority debts. If you post your Statement of Affairs (SOA) I'm sure someone will be able to offer some advice.

DarkConvict

Do get an accountant to check the tax is correct and that some things cannot be offset against the business. My uncle was mis charged £6000 of tax and his accountant sorted it as it was wrong, i however have £1000 bill that is correct but due in part to tax office providing no guidance on P46's

I would pay the rent to keep your income.

But tax is a priority debt, and must be paid above all non-priority debts. So Business rent, mortgage/rent, council tax, fines, this tax bill, must all be paid before other debts like credit cards,loans. Generally you can repay the tax man over 3 years, so 5000/36 = ~ £140 a month.

Further advice is available free from business debtline if this is a business rather than personal debt. If it is personal, ring national debtline instead.

happymoneysaver79

Hi!
We were able to re-pay our tax bill in installments, could you do the same?
Hope this helps x

bondidreamer

First of all I would approach your landlord and ask for a reduction in rent for a period of time to ease your cashflow. This may be half rent/rent free holiday/25% off? They may be fairly happy to help you out as they will not want you to go out of business and have empty property to finance themselves. If they wont accept a rent reduction ask for time to pay the rent - spread it over the quarter that the rent relates to.

You have stated that your tax bill is five times your normal bill, so I presume that your business has become much more profitable? Has this continued since April? Your 5k tax bill will contain a "payment on account" for next years tax 09/10 year end, this will be £2,000 the same as your July payment. If your profits have dropped you will be able to get the payment on account reduced. Ask to estimate your 09/10 profits and set your PoA at a more acceptable level.

The best thing to do would be to contact the HMRC payment line and schedule the debt over 6/12 months.

HMRC Business Payment Support Line

Tel 0845 302 1435
Open Monday - Friday 8.00 am to 8.00 pm, Saturday and Sunday 8.00 am - 4.00 pm.

However this all pales in insignificance when put against your 60k debts, I presume that this isnt mortgage debt so maybe bankruptcy will be a possibility. This isnt to be considered lightly though, so I would contact a reputable insolvency practitioner.

Hope this helps, I would ignore the advice from Darkconvict as I dont think it is correct!