Loan to pay tax. Which lenders will offer this?

hodd

Hello all

I used to work as a contractor and had a limited company. I had to stop work rather abruptly and become a normal employee at a company. In doing so, my accounting affairs were less than perfect, and in the near future I’ll have to pay around £9000 in tax.

I don’t expect sympathy from HMRC. It’s a big no no to spend money in your business account which should have been set aside for tax. The only concession they are likely to offer is a 12-month payment plan although this isn’t automatically granted.

As I don’t have £9000 right now, the 12-month payment plan is doable, but it’s a stretch and won’t allow any room for emergencies, e.g. car repairs.

I’d feel far safer borrowing this amount and paying it back over two years. My own bank Santander do not offer loans for this purpose, and apparently a few banks don’t. Are there any lenders that will offer such a loan?

No lectures on accounting, please 😀 HMRC don’t really care I’ve had to spend the tax money, they just want paying.

Thanks

TripleH

I have a few questions that are important regarding how people here can advise you accordingly as to solutions:

1. What tax is owed? VAT, Corporation Tax or is it from Self-assessment?
2. Does the limited company exist or has it been wound up?
3. When is the tax actually due or is it due now and HMRC are chasing for payment?
4. Do you have any other debts/loans you are paying off?
5. Have you drawn up a budget so you can live and pay off your debts at the same time on your current salary?

If the money you owe is not officially due, there are ways you can deal with this in a controlled fashion.

As to borrowing from a bank etc to pay off tax, i would be surprised if you can find anyone who would do this, and would expect you would have an unplesant APR to pay back.

hodd

Hello TripleH

1. Corporation Tax (VAT and SA are sorted)
2. It’s in the process of being wound up
3. The return is yet to be filed. HMRC are likely to start chasing from the end of October 2019
4. No, just a mortgage which is around £500 a month
5. Yes

Interested in any controlled ways. There seem to be dodgier ways, but I don’t want to come back and bite me in a few years.

An unpleasant APR isn’t ideal, but HMRC are not flexible. They will take action to get this money, and that will be far less pleasant.

Thanks ��

TripleH

Right, not as bad as it could be. Will post a detailed answer tonight but as the deadline for payment has not passed the good news is you have more wriggle room to put forward an arrangement to pay to HMRC without having to borrow.

hodd

Thanks. HMRC have a helpline for this. They’re fairly helpful, and they have advised that the 12 month payment plan is likely to be their best offer. My tax return hasn’t been filed yet. I called them with a general enquiry, but they can’t do anything until they receive the tax return.

It may be the case they offer even less flexible options such as immediate payment in which case I couldn’t pay. That’s why I need to ask about a loan as the helpline really emphasises that the 12 month option shouldn’t be assumed. It is my first time to ask HMRC for any sort of concession.

TripleH

Hi, if you write by post a proposed payment plan to HMRC outlining when you plan to make payments and if you send an initial sum of money over, by being proactive with HMRC by saying this is how i intend to pay my debts off and here is evidence that i will do it and then continue on with the plan, by the time it gets through HMRC's systems, you should have made a couple or so payments.

If you take the proactive approach and dictate to HMRC a sensible plan backed up with regular payments you could extend the repayment plan beyond 12 months to say 15 or even 18.

My experience is that if you have started making payments HMRC may complain about it but they will devote their time to chase debts where no money is coming in as long as you keep making payments as per your proposal.

But you need to set a realistic repayment plan and keep to it.

Even if you decide to get a loan, i would still put a repayment plan forward and stary paying it whilst you are pursuing a loan. It means you borrow less and will buy some time to find and get a loan in place.

so_very_confused

Hi
Ring Business debt line now. As it is Corporation tax and the business is in the process of being wound up you are in a better position. Seek advice from BDL I found them very helpful.
They will do a budget with you and give advice to repayments. They are often staffed by ex HMRC personnel so know their business!

hodd

Many thanks, so very confused

I assume this is the website?

https://www.businessdebtline.org/

Thanks too, TripleH

I was expecting a “Corporation Tax isn’t your money!” reception, which is true but not very constructive 😀, but you two have taken the time to write nice and helpful replies which are very much appreciated.

By the way, not important, but the tax return is a joint one for 2017/8 and half of 2018/9. Why did I get to this point?

1. I shoved a lot into a private pension
2. My self assessment tax bill (plus payment on account) were way higher than expected. The new dividend tax didn’t help.
3. I stopped trading suddenly and took up a normal job. If I’d have carried on 6 months to a year knowing I’d stop, I’d have left my accounts in a more responsible state.

It’s not the end of the world, and I’m glad I’ve made this mistake when I’ve still got quite a few working years left to recuperate financially 😀

hodd

Wow, thanks 👍

so_very_confused

You are not clear whether HMRC are chasing you yet? If not lie low, wind up business immediately, they may put a block on this but worth a try. If the are not, then lie low and yes seek advice from Debtline. Also I would seek advice about filing a return, as I did not.
I was in a similar position to yourself, ltd company, ill had to stop work for several months, borrowed on CT, never able to get back due to ill health. However although less amount about £5000 no one came after me. Don't feel good about it but as my accountant told me barclays pay 2% CT. Also always paid my taxes not in my character not to pay my debts.
Hope this is helpful.

so_very_confused

Another pointer type in Can't pay Corporation Tax to Google you will find lots of good advice. Also try Debt camel. More than happy to help, this almost had me suicidal......!