The Association of Taxation Technicians (ATT) is encouraging any individuals and businesses who will not be able to pay their tax on time to contact HMRC as soon as possible to ask if they would be eligible for a Time to Pay arrangement.
Making a Time to Pay arrangement via HMRC’s Business Payment Support Service (BPSS) could help those struggling to meet their tax bills to avoid late payment penalties. The cut-off date for contacting BPSS is your due date of tax, which can vary; for Self Assessment purposes, the cut-off date is 31 January 2018 – two weeks today. Businesses struggling to pay other taxes (for example, VAT) must apply before the next payment date. For VAT this will depend on the frequency and timing of the business’s returns.
Individuals and businesses who cannot meet their tax liabilities can apply, before the tax is due, to set up a Time to Pay arrangement. The BPSS can be contacted in the first instance on 0300 200 3835.1 It should be noted that HMRC are not obliged to make Time to Pay arrangements and can refuse applications.
Many individuals in Self Assessment will have tax bills to pay by 31 January 2018. This is the deadline to pay tax due under Self Assessment for the 2016-17 tax year. Some individuals will also need to make a payment on account for the 2017-18 tax year by the same date.
Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said:
“It is important that anyone who knows that they will not be able to pay their tax on time contacts HMRC as soon as possible. Where a Time to Pay arrangement is agreed, this should mean that late payment penalties are not charged, although interest will still be charged on any overdue amounts. HMRC charges three per cent interest on overdue tax.2
“The BPSS covers a wide range of taxes which means it can also be used by businesses who are struggling to meet their PAYE and VAT liabilities. Unlike corporation tax, which is due on an annual basis for all but the largest businesses, PAYE and VAT liabilities arise on a regular basis. A business faced with an unexpected event which causes unforeseen cash flow issues could approach the BPSS for help with these taxes.
“Some individuals may struggle to meet Self Assessment bills this year as on 13 January 2018 HMRC stopped accepting payment with a personal credit card. Despite being called the Business Payment Support Service, the service is also available to individuals.
“Affected individuals and businesses need to be aware that HMRC is not obliged to help and can refuse to enter Time to Pay arrangements, which is another reason why anyone who knows they will struggle to pay their tax should get in touch with HMRC as soon as possible. Once the tax is already due and you cannot make payment, it is too late to contact the BPSS and you should contact the number on the demand letter to seek further help.”