MSE News: 500,000 get tax payment extension as HMRC runs out of paper

Bandraggle

no_choice_now wrote: »

Common law supercedes statute law. An invoice can be disguised as many things, including a statement, a fine, or a letter. Commercial law 101.

I'd like to see you try to argue that in front of a tax tribunal.

The obligation to make payments on account is generated by and based on the previous year's Return (S59A(2) Taxes Management Act 1970).

It might blow your mind to know that, if you you sent in an un-solicited 2006-07 Return tomorrow (a failure to notfiy) and owed tax, you'd have to pay interest on that tax going back 3.5 years. And you could be charged a penalty based on that tax.

I'd be interested to know how a lack of 'invoice' in 2007 would supercede the obligation to notify chargeability under Section 7 Taxes Management Act 1970.

ladela

My husband phoned this morning and asked if he could make an arrangement to pay the outstanding balance by direct debit over the next 6 months (they told us last week this was possible) because we didnt have the funds to cover the payment on account. They advised him he should take a loan out to pay his tax!!

The reason we don't have the funds is because he's only in his 2nd year trading (as a gas engineer). The tax man wiped our account out in January when we had to pay 150% of the tax due. Then his van broke and we had to replace it, and next month he has to pay to renew his gas qualifications (he can't trade without them). This summer has been very slow trading wise so its just not been possible to put the money away for the tax man. I couldnt believe they thought the solution to the problem was to take out a loan....what planet are they on? We can afford the monthly direct debit, and it will be clear by December - I have no issue with the 3% interest, fair enough. Anyway, eventually they agreed and I can sleep tonight!

chrismac1

Note that they were well out of order! There was a recent Tribunal case - in fact there have been a few, can't quite put my finger on the names - where the Tribunal ruled that lack of funding for payment of tax bills WAS a reasonable excuse for slow payment, and hence fines applied by HMRC after having been told the business had cash flow problems were wiped off the account. The Tribunals specifically mentioned that HMRC were behaving in no way different to credit card companies, hence the all-too frequent phoneline cry of "borrow money on your credit card to pay this tax bill!" I suspect would find no favour in the Tribunals.

As I have said many times, never assume HMRC either have the law on their side or are behaving ethically. Whilst this may have been generally true 15 or 20 years ago, as the Treasury Select Committee have pointed out only today, HMRC have been pretty much in meltdown for 2 years or more now and taxpayers have sufferred greatly from this.

cottager

Ladela: HMRC's Business Payment Support Service for paying tax or VAT in instalments over 6 months may have been of help to you. It was introduced not long after the start of the recession, but can only be used if you apply in advance of when a payment's due.

It worked well for us and was a real help with OH's income tax when we hit cashflow problems about 18 months ago in the downturn. Business had been bad and the payment fell at the same time as the quarterly VAT was also due -- but we could manage that, so it was only his tax in our case.

There's a separate number to apply to (see link above). Our accountant made the call and it was set up within minutes apparently, then we received payslips in the post -- I used the first to pay a cheque in at the bank, but settled the rest by direct bank credit online. Payments must be on time and never received late, or they'll cancel the agreement and the full amount becomes due with interest (oh, and you do have interest to pay anyway with this scheme, but it was reasonable).

The only thing was, because it had sounded so simple the first time, when business hadn't improved much and we were still in some difficulty 6 months later for the next instalment, we decided to ring ourselves thinking it could just be done again with their agreement. But we were told before they'd agree again they'd have to look more closely at our accounts, so we dropped it as we didn't fancy that -- not, I hasten to add, because of any wrongdoing or reluctance for them to be seen, but you could just see it ending up being hassle and delay.

When we related this to our accountant later she said we should have asked her to arrange it again, as she could have answered more detailed questions and was confident she could have talked them round from that requirement.

I know where you're coming from: it's far from easy to keep tax safely to one side when business is slow, so this scheme really was a genuine help to us at a bad time. Maybe in fact it's what they've put you on now, but I'm a bit doubtful as I'm fairly sure the BPSS is managed through a separate dedicated section. Anyway it seems you're sorted for now, but it could be worth bearing in mind next time if you need it.

Nosht

They are probably short staffed as well. Make it more difficult for them by doing all your transactions in writing & really clog up their system.

N.

no_choice_now

Bandraggle wrote: »

I'd like to see you try to argue that in front of a tax tribunal.

It's been a well known fact for hundreds of years lol