Is having spent tax money on bills a valid excuse for not paying tax on time?

ColonelCabbage

Each year, self-employed people set aside money for their tax return. I spent that money on bills. Income-wise, previous tax year was "good" so I have a substantial amount of taxes to pay for that year by February 2024. But current tax year's income is terrible hence I had to spend the money set aside for taxes on bills instead.

In the eyes of HMRC would that be a valid excuse for me to not pay taxes on time?

(section "What if I can't afford to pay the tax?" of https://www.moneysavingexpert.com/news/2020/12/filing-a-self-assessment-tax-return--you-ve-got-a-month-until-th/ gives a list of valid excuses for not paying tax on time, but my excuse isn't part of the list)

[Deleted User]

It most definitely won’t. If you can’t pay the tax due in January you absolutely need to contact HMRC. 

You can set up a payment plan here:

https://www.gov.uk/difficulties-paying-hmrc

but I probably would be more inventive with your explanation other than you the fact that you had to pay other bills instead. 

amanda1024

Have you considered applying for benefits - if your income isn’t enough to pay your bills?

ColonelCabbage

@[Deleted User] inventive like what for example? I'm not good with that sort of thing. Also it's weird to have to invent something when the real excuse is definitely valid - I mean what can be more valid than the necessity to pay basic bills.

@amanda1024 with income of £0 for the month I get £850 (no partner no kid). Who can live with that? I can't even get council tax support because my council calculates it on the basis of previous tax year income - in my case way too high to qualify for council tax support.

[Deleted User]

ColonelCabbage said:

@[Deleted User] inventive like what for example? I'm not good with that sort of thing. Also it's weird to have to invent something when the real excuse is definitely valid - I mean what can be more valid than the necessity to pay basic bills.

@amanda1024 with income of £0 for the month I get £850 (no partner no kid). Who can live with that? I can't even get council tax support because my council calculates it on the basis of previous tax year income - in my case way too high to qualify for council tax support.

I simply meant that it wouldn’t be the best idea to tell HMRC that you spent the money which you had previously set aside for tax on other bills. 

A general statement to the effect that you 

a) are struggling financially with the general cost of living at the moment

b)  have a reduced income

and, as such, you are not in a position to settle your tax bill is the way to go. 

HMRC has got more sympathetic over the last few years. Prior to that it was much more difficult and they would have expected you to have exhausted all options to raise money. 

I don’t see why you shouldn’t have a decent chance of an agreement to a payment plan. One piece of advice though - stick to the agreement.

Grumpy_chap

ColonelCabbage said:

I had to spend the money set aside for taxes on bills instead

In the eyes of HMRC would that be a valid excuse for me to not pay taxes on time?

No.

ColonelCabbage said:

with income of £0 for the month I get £850 (no partner no kid). Who can live with that? 

My wife and I live on less than that many months quite comfortably.

If you are operating as a sole trader and generating an income of "NIL", has the minimum income floor been applied by the UC DM?
Regardless of that, if the self-employment is not generating an income, can you seek regular employed work?  It may result in a more comfortable standard of living and less stress.

MattMattMattUK

ColonelCabbage said:

@ purdyoaten2 inventive like what for example? I'm not good with that sort of thing. Also it's weird to have to invent something when the real excuse is definitely valid - I mean what can be more valid than the necessity to pay basic bills.

In general spending money that was not really yours to spend is not going to go down well, so stick to the advice above and just blame COL.

ColonelCabbage said:

with income of £0 for the month

If your income is £0 are you really self employed? It would seem that you were previously self employed and are now unemployed.

ColonelCabbage

@[Deleted User] thanks a lot for your advice, will def follow it!

@Grumpy_chap how in the world can two people live comfortably with £850 in the UK? Are you paying a rent?

@MattMattMattUK will stick to COL. It's 0 for the current months because I can't get any job - job market in IT is horrendous right now. Getting virtually no response to my applications, I've never seen that since I started many years ago.

Grumpy_chap

ColonelCabbage said:

@Grumpy_chap how in the world can two people live comfortably with £850 in the UK? Are you paying a rent?

We are rent and mortgage free.
Since August and at least until March our income has been £650.  
It is quite enough for day-to-day and we've not needed to draw on savings.  We had a very wholesome Christmas and we went out for New Year's Eve.  There is a lot of fun to be had with community.

njkmr

"Sorry Mr Landlord i cant pay this month , im skint."
Why says Mr Landlord ?
"Because ive just had to pay my bills elsewhere and have nothing left for you."
Ive heard this a lot , and its no excuse whatsoever.
I cant see HMRC saying "oh dont worry poppit give it us when you are ready."
Being self employed takes a lot of planning and forward thinking and im sure is difficult but its the nature of the business. You should really have thought about it more in the good times im afraid and made sure enough was put aside in anticipation of the bill.

ColonelCabbage

njkmr said:

"Sorry Mr Landlord i cant pay this month , im skint."
Why says Mr Landlord ?
"Because ive just had to pay my bills elsewhere and have nothing left for you."
Ive heard this a lot , and its no excuse whatsoever.
I cant see HMRC saying "oh dont worry poppit give it us when you are ready."
Being self employed takes a lot of planning and forward thinking and im sure is difficult but its the nature of the business. You should really have thought about it more in the good times im afraid and made sure enough was put aside in anticipation of the bill.

So paying taxes to the state trumps everything else, including paying basic bills or even keeping a roof over one's head and food on the table. Out of curiosity do you pay taxes to the state only or do you offer sacrifices to it as well?