Tax Bill Nightmare!

One_step_forward

Hi,

My husband and I are both Self Employed so we are both awaiting that massive bill that arrives just after Christmas, normally we are prepared for this but this year my husband has been off work due to an accident for almost four months and so we have had to dip into the savings.

Because of the accident my husband lost 90% of his winter work, (the company he was working for at the time of accident and who we are in the process of claiming compensation from).

We are at the lowest we have ever been in the overdraft and are dreading the January bills. Is there any way we can pay instalments or will we be fined for late payment?

Worrying like mad !!! Dare not spend anything for christmas... HELP!!!!

PS I know its late but I haven't even done the accounts yet.... just keep putting it off hoping it will go away!!!

System

You can contact HMRC when you receive your bill and ask them to adjust your payments on account for 07/08 because you expect your profits to be much lower this year due to your husbands accident.

However regarding what is owed for 2006/2007, if you haven't made payments on account then you would have been expected to set aside a portion of your profits during that year in anticipation of your tax liability and interest would be charged if you are unable to pay that bill off in full.

Hoddie_2

HMRC will usually allow you to pay over 3 months but may need some convincing that you genuinely cannot afford to pay in full by the due date - this might mean you'll need to provide details of incomings/outgoings.

Better to make a deal than just not pay - you'll incur interest either way (8.5% annually, added daily), but by making a deal you'll avoid the fairly hefty 5% surcharge.

One_step_forward

Thanks for your response....

Will get the accounts into the accountant at the beginning of next week so I am more prepared as to what the figures will be......

Life would be so much easier if we were employed!!!

At least the money you get is your own!!!

Mikeyorks

One_step_forward wrote: »

A) Is there any way we can pay instalments or will we be fined for late payment?

Current top priority is to get the Return filed - and it would help your case to get that in well before the 31st Jan deadline ..... in order you know the liability you're going to have to discuss with HMRC?

In the circumstances you describe - they're normally amenable to instalments and, for SA, that's not limited to 3 months. But it's critical you get everything arranged well before 28th Feb 08 - as a 5% surcharge (as previous post) otherwise kicks in at that point.

But - get in early, the ostrich position doesn't work in these cases. Contact them well before the 31st Jan due date - and that works in your favour as it indicates a desire to be 'compliant'. Phone the Payment Helpline - on 0845 366 1204 - which specifically deals with arrangement cases for SA. Best if you know the liability in advance - but a good estimate from your Acct otherwise. Suggest you ring them early Jan - and have your negotiating skills honed. If you're looking to pay over more than 3 months - they will press you to pay by Direct Debit. And there will be an Interest charge on all monies paid after the due date of 31st Jan (that's not negotiable) ...... so best all round if you can pay a largish sum upfront (just prior 31/1) - then smaller instalments. Rather than just trying to equalise all the instalments. Bit of reading here :-

http://www.hmrc.gov.uk/manuals/sam/sampay/sampay04105.htm

- if your proposal is likely to extend over the 31st July interim payment - then that will be taken into account in the arrangement. So you need your Acct to get at your figures early - and determine if the payment in July should be reduced from the 50% that normally pertains.

One_step_forward

Just to let you know that my accounts going into accountant this afternoon and hubbys to follow next week. Waiting for some info before I can complete his.

Good news is that mine does not look too bad and should be ok!

Feel a lot better now I have those heaps of paper under control and a lot more organised for next year....

Thanks for the final push!!!!

Carol