Tax payment concerns?

As we head towards the festive period, we’d usually be reminding clients to make their Payments on Account and any balancing tax payments on the 31st January 2021. In common with the rest of this year though, this time things are slightly different!

There have been a range of announcements around tax payments that can be deferred, and potentially paid in instalments. As a result, there’s quite a lot of confusion around what is due and when, so in this post I’m going to summarise the current position with each for you.

In all cases…

There are some key facts to take accounts of, that apply to ALL types of tax:

• Contact HMRC BEFORE your payment is overdue; they are MUCH more likely to be accommodating!
• Have a plan that you know you can stick to. If you make an arrangement and renege on it, they won’t be understanding a second time.
• Have your tax references, amounts due and related due dates to hand when you call.
• Have details of all other amounts you might already owe, or that you may be due to pay in the period of any payment arrangement, so that you are making a plan that takes account of all liabilities.
• Be prepared with your bank details when you call too, as you’ll need to set up a Direct Debit so HMRC can draw the agreed payments as they fall due.
• Remember interest will be payable on any payments made through a payment arrangement, but by making an arrangement in advance of any due date, you will avoid accompanying penalties.

Personal Tax / Self Assessment

1 Payment on Account – originally due 31st July 2020

This was automatically deferred to 31st January 2021, without any need to contact HMRC. It can now be paid in instalments over the year to 31st January 2022, if you can confirm to HMRC that you have been affected by Coronavirus.

This option may not be possible if you already have a time to pay arrangement with HMRC, or your liability is more than £30,000.

To make a time to pay arrangement with HMRC, follow this link.

2 Payment on Account and any Balancing Payment – due 31st January 2021

As above, this can be paid in instalments through to 31st January 2022, if you can confirm to HMRC that you have been affected by Coronavirus.

VAT

VAT payments that fell due between 20 March 2020 and 30 June 2020 were originally automatically deferred to 31 March 2021.

Recent announcements have given until 2022 to pay any deferred amounts in instalments for businesses affected by Coronavirus.

You must contact HMRC to arrange to make payment by instalments. Find the necessary contact details for VAT here.

PAYE

There was no automatic deferral of these amounts, which are usually due monthly or quarterly.

If you cannot make your payments as due, follow this link to find the contact details to speak to HMRC.

Corporation Tax

There was no automatic deferral of Corporation Tax payments and they remain due nine months and one day after the company year end.

As with PAYE, if you cannot make your scheduled payment, speak to HMRC as soon as possible using the contact details in this link.

PLEASE NOTE: Companies House have extended the filing deadline for accounts by three months without penalty. Many companies are at risk of late payment penalties and interest from HMRC as a result, as they may not have prepared the related Corporation Tax Return and paid any Corporation Tax that falls due by the usual filing deadline of the accounts. This is nine months from the year end, with any Corporation Tax being due nine months and a day after that point.

As ever, please get in touch if you’re unsure about making payment arrangements; we are very happy to chat you through the process. We cannot however make the arrangements with HMRC on your behalf.