Muras Matters: Self Assessment ‘Time to Pay’


Self Assessment
‘Time to Pay’

Time to Pay!
As stated in Muras Matters last week the deadline for filing Self Assessment Tax Returns and paying any outstanding tax due is 31 January 2015.

Taxpayers struggling to pay their tax liability however may, under certain circumstances, be able to enter into a ‘Time to Pay’ arrangement with HM Revenue & Customs. In order to request this taxpayers should contact HMRC Business Payment Support Service on 0300 200 3835 (despite its name non business customers can also use this number).

It is important that contact is made with Business Payment Support BEFORE the tax is due for payment on 31 January 2015 as HMRC will not agree to a Time to Pay arrangement after the deadline to pay has passed. It will obviously be harder to make contact nearer the deadline as the volume of taxpayers seeking to make an arrangement increases. We would therefore recommend getting in touch with HMRC sooner rather than later.

As the arrangements are at HMRC’s discretion they can refuse a request and insist that the tax is paid. Further they will require a significant amount of information before agreeing to a delayed payment plan. This will include:

• The tax reference number (e.g. 10-digit unique taxpayer reference)
• the amount of tax due and the reason why payment is difficult
• what action has been taken to try to obtain the funds to pay (e.g. contacting the bank or other lenders)
• how much can be paid immediately and how long is required to pay the balance
• details of income, expenditure, savings and investments
• the actions being taken to get tax payments back in order
• previous payment history, whether previous returns and payments have been made on time, any prior Time to Pay arrangements etc.
• Other tax liabilities to be taken into account (for example VAT may fall due during the Time to Pay arrangement, affecting cashflow).

HMRC still charge interest on Time to Pay liabilities but surcharges are not applied if payments are made as agreed in the arrangement.

Late Payments and Surcharges
Interest is charged on overdue tax, currently at 3%, and this also applies to Time to Pay arrangements. For liabilities due by 31 January 2015, if no Time to Pay arrangement is in place surcharges will be added to any liabilities still outstanding at the following dates:

1. an initial 5% on 1 March 2015

2. a further 5% on 1 August 2015

3. a final 5% on 1 February 2016.

In order to avoid these surcharges, it is vital that contact is made with HMRC before the initial liability falls due.

If you need any advice or assistance with your tax liabilities or alternatively would like to discuss any of the above please contact our Tax Director Jenny Marks.