I can’t pay my Corporation Tax – what should I do?

Coronavirus, Corporation Tax, Limited Company,

Unless you save towards your Corporation Tax liability as the year goes on, it can be hard to find the lump sum when it falls due. Whilst we’d always advocate for saving as you go to avoid the stress of a last minute panic, sometimes the best laid plans don’t work, and you may struggle to find the cash to make your payment.

When are Corporation Tax payments due?

Corporation Tax is calculated on the profits of a Company, and is payable nine months and one day after the Company’s year end. Penalties and interest apply on amounts that aren’t paid by the due date.

What should I do if I can’t make my Corporation Tax payment?

There is an HMRC helpline to support businesses who may not be able to pay their tax that is due. This may be by making a Time To Pay arrangement, allowing you to pay by instalments.

If you’d like to discuss making a payment arrangement with HMRC, you should call the dedicated helpline number (0300 200 3835) to do so BEFORE your payment is due. They are open Monday to Friday 8am to 6pm.

Bear in mind that this is only going to delay the liability, not remove it entirely, so be sure to include it in your cash flow planning for the future.

It’s best to have as much information as possible with you when you call, including the Company’s UTR, the amount and date the payment is due.

What else should I consider before making a payment arrangement?

It’s important to look at your overall cash position before committing to a payment arrangement with HMRC. Once you have agreed an arrangement, you will have to adhere to it.

I have the cash to make my Corporation Tax Payment, but how do I do it?

Historically, a Company would receive a payment slip from HMRC, which provided all of the correct references and bank account details to use. These enabled HMRC to allocate your payment to the right Company, and to the right accounting period. The format of these has changed in the last year or so, and there is no longer a payslip at the bottom of the form, but all the other details are included.

If you don’t receive a Notice, please use the following details. These may differ from those on the Notice, which should be used in preference, but will work as a fall back position and enable HMRC to trace your payment.

Sort code: 083210
Account number: 12001039

You’ll need to log in to your HMRC account, or speak to your accountant, to find out what reference to use. This will NOT be the same as you used to make your last Corporation Tax Payment, as they change each year.

As ever, if you’re unsure of the best course of action for your business, please get in touch. We’re very happy to chat through the various options and help you reach the best decision for you.

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