With the New Year comes the realisation for many that the Self Assessment deadline is upon them and their Income Tax payments are due by January 31, 2011. In these difficult economic times a number of people may not have the funds immediately available to meet their liability by the due date. Before reaching for the phone to extend your overdraft or taking out your credit card, don't forget that you can always approach HM Revenue and Customs (HMRC) and seek 'Time to Pay'.
Our experience suggests HMRC have recently tightened up their approach to TTP and are not as supportive as in previous years, however, the facility is still available and is definitely worth a try.
TTP arrangements are potentially available on any tax liability, are entered into on a case by case basis and are typically for a few months although they can be longer. Under no circumstances can HMRC ever reduce the amount of tax due as part of a TTP arrangement and they will only agree TTP where they are satisfied that you cannot pay your liability on the actual due dates but that you will have the means to pay the taxes included in the TTP arrangement and any other taxes outside the arrangement which become due during the TTP period.
You must offer the best payment proposals that you can realistically afford. If your ability to pay improves during the TTP period then you must contact HMRC and increase your payments/clear the debt.
If repayments of tax become due during the TTP period HMRC will offset these against the debt. HMRC cannot on the one hand allow TTP whilst at the same time issuing a repayment of tax.
Applicable interest will always be charged when payments are received after the due date, irrespective of whether TTP has been agreed or not. However the 5 per cent surcharges arising if payment has not been made by February 28 and July 31 are avoided if TTP has been agreed.
If you know what your tax liability is and you need support in making the payment, then contact The Business Payment Support telephone line on 0845 302 1435 - lines are open Monday to Friday 8am to 8pm, Saturday and Sunday 8am to 4pm.
HMRC will ask for the following information:
• your tax reference number
• your name and/or the name of your business
• your/the business address including the postcode
• a contact telephone number
• details of the tax that you believe you will have difficulty paying
• details of any repayments you are currently receiving and/or may receive from HMRC in the future
They will then ask you to explain:
• why you are unable to pay in full and on time
• what you have done to try and raise the money to pay your debt
• how much you can pay immediately
• how long you think you will need to pay the rest
HMRC is bound by TTP agreements that it enters into but is entitled to withdraw if:-
• new facts come to light that don’t support TTP
• you have misled HMRC or been untruthful
• you default on the arrangement or do not satisfy the conditions of your TTP
• any other reason comes to light where it becomes apparent that tax is at risk
For further advice regarding TTP and negotiating terms with HMRC contact Bill Benoy at Morris & Co. on 0151 348 8400 or alternatively email him at firstname.lastname@example.org.
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