Paying business debts to HMRC should be at the top of the list of priorities. If a company does not budget or plan for their taxes, this can lead to some serious problems in the future.
Preventing HMRC debt can be as simple as ensuring that tax bills are paid on time and prioritising these debts on top of everything else. If the business cannot pay its HMRC debts, it should initially consult its accountants and they can help reach the most appropriate solutions and find ways to pay. It is also important that the problem
is not ignored; HMRC should be contacted as soon as possible to discuss the matter as the consequences of not paying these taxes could result in bailiff or court action.
PAYE Tax Problems Advice and Support on HMRC PAYE arrears
An employer usually pays both income tax and National Insurance as part of the PAYE
(Pay As You Earn) system, and deducts the amounts from wages. If an employer or contractor is late to settle PAYE obligations they will be charged late payment penalties on the amounts due. Before this happens, they will receive a late payment penalty warning letter about two weeks after the payment is due. The purpose of the letter is to notify them that HMRC did not receive the payment when it was due, and that there may be a penalty charge. It also explains how to avoid a penalty in the future and outlines the various ways the outstanding amounts can be paid.
It will also outline details of what to do if the owner feels that the penalty is inaccurate or wrong. The penalty rate will depend on how much is late, and how many times the payments are late within an entire tax year. If the full amount is not paid, this will count as a late payment, unless there is a special arrangement in place with HMRC such as an IR35 or modified PAYE arrangement.
If you cannot pay your PAYE, you must contact HMRC immediately to discuss the situation. It will always be better to contact them before the payment is due instead of afterwards.
VAT Tax Problems Advice and Support on HMRC VAT arrears
VAT is a tax that is charged on most goods and services that registered businesses provide in the UK. It is charged when a registered business sells to their customers. A business has to register for VAT if it has a turnover that exceeds the VAT threshold
It is the responsibility of the company to account for VAT on all of its products and services, and to fill out the VAT return, return it and pay on time. If the payment is missed, there will be a requirement to pay a ‘default surcharge’ which consists of a percentage of the unpaid VAT. If payments continue to be late, the percentage will increase. This also applies to incorrect VAT returns. If a business is having difficulty paying VAT, they must contact HMRC before the due date of the return. If they do not submit a return at all, HMRC will estimate the amount of VAT that is outstanding and base the amount of the surcharge on this amount. This is known as an assessment, and if you still have not sent a correct return after receiving the assessment, HMRC will increase the amount you owe and base a new surcharge on that amount.
If a business is able to submit their VAT returns, it is very important to ensure that the information is up to date and accurate, or there may be a penalty. If a business is liable for a penalty, they will be told in writing. This does not happen until after some initial contact with HMRC where the tax arrears would have already been discussed.
In case a business is having trouble paying VAT, it is recommended that they continue to organise and hand in returns on time but contact HMRC’s Business Payment Support Service before the VAT is due.
Corporation Tax Problems Advice and Support on HMRC Corporation tax arrears
Corporation tax is a tax on the profits of limited companies. These taxable profits can include profits from income such as trading and investment profits, excluding dividend income which is taxed differently. Capital gains are also taxed and known as chargeable gains for corporate tax purposes.
It is up to the businesses themselves to work out how much corporate tax is owed, which is known as Corporation Tax Assessment. This is done by filling out a Company Tax Return and sending it to HMRC on the dates they are due.
If a business’s Corporation Tax is not paid according to deadlines, they will face a penalty. This can be mitigated by paying the tax as soon as possible and correcting any errors there may be. If a Company Tax Return is filed late, there will be a flat rate fine. If the return is late by more than three accounting periods in a row, the penalty increases the later the return is submitted.
Business Rates Tax Problems Advice and Support on business rates arrears
Business rates are a tax on the occupation of non-domestic properties such as commercial properties including shops, offices, warehouses, pubs, factories and other such buildings. They are used to pay for local services such as waste pickup, local infrastructure maintenance and improvement as well as any other services supplied by the local authority. If a business is using a building or part of that building for commercial and business purposes they will be required to pay business rates.
If a company cannot pay their business rates, it is recommended that they contact their local authority as soon as possible to mitigate any issues that arise from not paying. Failure to pay an instalment will result in a reminder being issued which will be followed by more reminders if payments continue to be missed.
If by this point the rates have not been paid, the options to pay in instalments will be lost and the company will be ordered to pay the outstanding amount in full within seven days. Failure to comply with this will result recovery action via the Magistrates Court.
There are ways in which businesses can get relief from business rates to reduce the amount that they have
to pay. Since April 2005, small-business rate relief has been an option and companies can apply to local councils to find out if they qualify.
Businesses can appeal against the valuation made by the district valuer within six months if they think that they are paying too much. Alternatively, if there are any changes to the building then the rates could be reduced. Companies should always seek professional advice in these situations.