If you’re one of the thousands of individuals to experience tax debt problems every year, don’t panic.
Small businesses and home-based businesses are incredibly vulnerable with tax debt. Not only do small businesses have to find the time to deal with starting up and running a new businesses well enough to at least break even, they need to be fully compliant with legal and regulatory obligations such as health and safety and employment law.
In addition, tax returns must be complete, accurate and sent on time. Avoiding tax return duties is often tempting for entrepreneurs, as it’s both financially consuming and time consuming.
All too often, this is exactly how a small business will enter into a downward spiral, with tax debts becoming more and more unmanageable.If your business is experiencing similar problems, avoiding the issue by burying your head in the sand will only make the situation worse.
Eventually, HM Revenue and Customs’ tax recovery department will pursue the outstanding amounts through recovery action, resorting to asset seizing and winding up of businesses.
However, help is available for those who seek it as soon as the experience tax debt problems
Key Tips for Those Struggling with Tax Debt
Don’t Ignore the Problem: The most common mistake that people make is ignoring the problem. Ignoring the problem never works and only acts to make things worse. The sooner action is taken to address the problem, the better.
Register as Soon as Possible: Many new businesses are required to register with the Inland Revenue, but many don’t, in the hope that deferral of registration will result in deferral of tax payments. However, failure to inform HMRC of your taxable income can result in additional penalties in addition to surcharges and interest, with prosecution in extreme cases.
Pay Your Tax on Time: Ensuring that your tax payments are made on time is important, such as completing self-assessment forms and VAT returns. Failure to keep up to date will cause interest, penalties and surcharges to mount up.
Prepare for Your Tax Bill: It’s useful to put some money aside every month to assist in paying your tax bill. Including the Class II National Insurance contributions in this savings pot can also help to prevent any surprises if you’re self-employed.
Tackle Tax Early: Those who tackle their tax problems early on will find that tax isn’t so difficult to handle. Inability to meet a tax payment shouldn’t be ignored until the Inland Revenue contact you. Meet the problem head-on by contacting them to discuss why you can’t pay on time and when you can pay; they’re much more likely to be sympathetic if you want to cooperate.