Corporation Tax - Covid-19 deferred - Penalty charge!!!!

AdeJ

If anyone has deferred their Corporation Tax till June - You better check now if you have a penalty charge, as we have..........

We are a small events company and are a limited company.

At the start of the corona virus epidemic we had a corporation tax bill for our business. We was told we could defer this to June with no penalties/late payment charges.
We spoke to HMRC and they confirmed this. We have the ladies name on record, we asked for a reference of the phone call and she just gave a name and said it was all on record.

We was told to call back at the beginning of June to see what our options are if we can still not pay. We are an events company and right at this moment we have zero income and all our events for 2020 like all of us in this sector.

We phoned this morning to discuss what our options are and was told that we have now got a 3% late penalty charge from March for late payment. We explained due to the virus we was told, government was told etc that we can defer this. She said yes, you can of course but a 3% charge per month is added to your bill. We have hit the roof as we are on our last legs and struggling and hanging on by our teeth at the moment. We read out the notes from the government to her and she said, im sorry - this is incorrect, virus or no virus im afraid a 3% charge on your account will be required.
We phoned back again and spoke to another person and they confirmed that a 3% charge on our deferred corporation tax as a late payment must be paid and they can not remove it, we told him we are waiting to hear back from our accountants but the guy from HMRC stated that no one can over turn this, a late payment charge is a late payment charge and we should have paid it to avoid.

We are totally devastated and since being in business for 27 years and this is the first ever time we have ever had to ask for a defer payment as the option was that there was no charge and to be told this has left me with hate towards HMRC, disgust towards why this is happening when we was promised no extra charges would be added on.
Basically - we can not afford this........its left me feeling physically sick.

Any advice?...but guess there is not as what the 2 people at HMRC have said, this can not be over turned....why the lies to get us to defer?

I used to have a a dislike to trades people doing so many cash in hand jobs....now it's making me think are they not as silly as they sound.

jimkelly

Try contacting your MP?

They are usually quite good with this sort of thing.

AdeJ

Thanks, I have just submitted this to my MP. 
Just disgusted how they are allowed to make the statement of it being penalty free live on TV many times...in parliament...on their websites and still saying they can defer again at a later date again with no penalties. I read this out to the lady at HMRC and she said, this is incorrect and penalty charges always apply.

mobilejo

There has not been any special covid-19 scheme to defer corporation tax.

It is for VAT and self assessment income tax only.

The standard arrangements relating to not being able to pay corporation tax remained available, but they include interest as you have found out.

Your argument can only be that the person you specifically spoke to at HMRC didn't inform you that interest would be added. But we weren't publicly promised that.

Jeremy535897

The rules seem to be clear:

"If you cannot pay other taxes

You might be able to set up a Time to Pay Arrangement with HMRC if you’re unable to pay any other taxes in full. This lets you pay what you owe in instalments.

How you do this depends on whether you’ve received a payment demand.

If you’ve received a payment demand, like a tax bill or a letter threatening you with legal action, call the HMRC office that sent you the letter.

If you’ve not received a bill or letter, call the Payment Support Service.

Payment Support Service
Telephone: 0300 200 3835
Monday to Friday, 8am to 4pm"

"Other taxes" are taxes other than VAT or self assessment, so corporation tax is an "other" tax. Interest at 2.6% is chargeable. That's not per month though, it's per year. Your payment date is not the most usual date for corporation tax, which is 30 September, so I wonder whether the first HMRC person was confusing it with VAT or self assessment, although it doesn't look right for those taxes either. Time to pay seems the best way to go. I know you understandably feel victimised, but HMRC staff don't lie to get you to defer paying tax and incurring interest as a result. There wouldn't be any point. They might, and frequently do, give wrong advice, whether as a result of a misunderstanding, or just plain ignorance.

I assume you have an accountant. Talk to them and get a time to pay arrangement set up. It's not going to go away. Have you applied for a bounce back loan?

Grumpy_chap

Your corporation tax bill is for past earnings of the company and therefore unaffected by coronavirus.

unholyangel

I think you've misunderstood. 

Interest is not a penalty (although some penalties may be a % of the amount owed). A penalty is something which (in law) punishes you for a wrongdoing. It has not been incurred as a cost or suffered as a loss. 

In other words, they're not punishing you for deferring payments...they're just making you bear the costs involved in deferring payments. 

mobilejo

Jeremy535897 said:

Your payment date is not the most usual date for corporation tax, which is 30 September, so I wonder whether the first HMRC person was confusing it with VAT or self assessment, although it doesn't look right for those taxes either. 

CT doesn't have a 'usual' date like self assessment - its just 9 months +1 day after the company year end, which can be any date the directors choose.

Jeremy535897

mobilejo said:

Jeremy535897 said:

Your payment date is not the most usual date for corporation tax, which is 30 September, so I wonder whether the first HMRC person was confusing it with VAT or self assessment, although it doesn't look right for those taxes either. 

CT doesn't have a 'usual' date like self assessment - its just 9 months +1 day after the company year end, which can be any date the directors choose.

But nearly all companies choose 31 December, so have a due date of 1 October (I did say 30 September), hence my comment.