If you’re having cash flow problems and don’t have the cash to pay your tax bill my first piece of advice is ‘don’t panic – there is help available’. Please do not put your head in the sand and hope it will just go away; it won’t and will just get worse. The sooner you ask for help the better.
*Update during Coronavirus (COVID-19) Pandemic*
HMRC have set up a helpline for those who are not able to pay their tax due to coronavirus (COVID-19). They will be helping businesses with relaxed and extended payment plans. We still need to file all returns on time, and we strongly recommend you speak to them as soon as possible if you are having difficulties in meeting payment deadlines. The number to call is 0800 0159 559. Please read our Coronavirus blog for more information, support and advice for the current pandemic.
As soon as you know you’re not going to be able to pay your tax bill you need to call HMRC and ask for them to set up a payment plan. Do not wait until after the due date or leave it until a day or two before it’s due. Get it sorted as soon as you know, and ideally well before the due date. We’ve always found HMRC to be much more helpful and willing to help if you contact them sooner rather than later; and trust me, the sooner you get it sorted the less stress you’ll put yourself under!
So, what do you need to do? First of all, get the return filed; never use the fact you can’t pay as an excuse not to file as this will just make the situation worse, then you can give HMRC a call.
When you call HMRC, it’s a good idea to have the following ready:
- Your reference number (be it your personal or business UTR/your VAT number/accounts office reference).
- The amount of the tax bill you’re having trouble paying.
- Work out how much you can pay immediately (if anything) and when you think can pay the rest, or at least have a reasonable plan on how you’re going to pay the bill.
- Your bank account details (so you can set up a DD for a payment plan).
HMRC will ask you why you don’t have the cash available as with all taxes (apart from PAYE/NI). You will have had the money and ‘should’ have put it aside ready for the bill, but we all know it doesn’t work that way in the real world and you usually use this money to pay other bills. As long as you explain to HMRC that you have a good reason for not having the money and haven’t just spent it all on a holiday or something else extravagant, they’ll be willing to help.
The number to call HMRC on is 0300 200 3835. The lines are open Monday to Friday 8am to 8pm and Saturday 8am to 4pm.
During the call they will speak to you about your income and expenditure, your assets (like savings and investments) and what you’re doing to get back on track with paying your future tax bills on time. These are standard things they will go through with you, and while it’s not the most fun thing in the world, they’re trying to make sure they set the payments of any plan at a realistic level so that you will be able to meet them. There is no point in them setting payments so high that you are unable to pay the agreed amount, so they need all the facts to make sure the payment plan they are trying to arrange for you is right, manageable and will not leave you in financial difficulty.
Finally, when you call them it goes without saying, be nice and friendly with them. I know you’re probably stressed (and most people see HMRC as the enemy) but the person at the end of the phone that you speak to is doing their best to help and wants the best outcome for both you and HMRC; believe it or not, they are on your side!