It’s not a good idea to upset the taxman. In an ideal world, every single business would be in a plum financial position; never needing to worry about not being able to pay their tax bill. But unfortunately, the world we live in is far from ideal. In the real world, things can go awry.
If you’re a business owner racked with worry because you’re not in a position to pay your corporation tax bill this year, don’t fret too much. There is light at the end of the tunnel...
Just because your financial difficulties mean that you’re currently unable to pay your tax bill, that doesn’t necessarily mean that you’re going to make an enemy of Her Majesty’s Revenue & Customs. They may seem a little scary, but be upfront and honest with them and HMRC will understand. They even have a whole department to deal with companies experiencing issues paying their tax bills (The Business Payment Support Service).
If you happen to be in this very scenario, your very first responsibility is to recognise it. Get your head out of the sand and be realistic about what’s happening in your business. You then need to contact HMRC and speak to one of their advisors, honestly and candidly. Hopefully, you should reach an agreement and form a plan together. They’re not as scary as you might think. We promise.
Before you call though, be sure to have the following information to hand:
- Your business name and address
- All your HMRC reference numbers (including your 10-digit unique taxpayer reference and/or your VAT reference number)
- Your bank account details
- Your exact income
- The full amount of the tax bill you are unable to pay
- The reasons behind your struggle to pay (perhaps you’re still awaiting payment from a large customer or client, for example)
- Your full expenditure
- All details of your business assets (including things like savings and investments)
- Full details of everything you have done in order to try and raise the funds to pay the bill
- Exactly how much you're able to pay immediately and how long you will need in order to pay the outstanding amount in some sort of affordability plan
- Details on precisely what you’re doing and will do in order to get your corporation tax payments back on track for next year
HMRC will try and help you out. But what is the bottom line for them? They want what’s owing to them. So they will often propose really quite overambitious payment plans with struggling companies. Ones that are often hard to stick to when a company is facing financial concerns. You need to be prepared to propose your payment planand present it to them along with supporting evidence as to why your deal is the most sensible one for them to take.
In your payment projection, you will need to plan for all future tax bills that are due too. HMRC seek to avoid setting up multiple arrangements with people wherever possible. And while they will listen to your payment plan suggestions, don’t expect them to necessarily agree to it. It’s also worth bearing in mind that the advisor on the telephone might not be prepared to sift over your accounts with a fine-tooth comb. So you may need to present your plan quickly and clearly.
If you consider that your business has run its course and is insolvent, then you will need to present records of all your year’s financial decisions, big or small. This is in order to demonstrate to HMRC that you have not been recklessly trading with no consideration of any increasing debt to the business. Tax or otherwise.
Like we say, agreements can be reached and plans laid out. But don’t forget - if part of the agreed plan involves moving the debt from the business to you, you may need to offer personal guarantees. If that’s the case, you need to think long and hard about those kinds of assurances before making them.
If you can’t reach an agreement on an affordable payment plan with HMRC, that’s when you come to us. Conversely, if the entire thing is causing you so much stress that you’re struggling to cope and you’d rather a professional deal with the whole process from the start, you can instruct us to handle your tax affairs immediately.
There is a chance that your situation may be a little on the complex side. Agreements with the tax office can’t always be reached. Sometimes it gets complicated and requires the kind of experience, relationships, knowledge and guile that only an insolvency expert like McAlister & Co can offer.
If things get out of your control - contact us. We’ll sort it all out for you with Her Majesty’s Revenue & Customs on your behalf.
But it doesn’t end there. It is vital for the survival of your business and your personal wellbeing that you make provisions in order to ensure that a similar situation doesn’t happen again in the future. How? By planning.
And we can help you with that as well.