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Difficulty paying your liabilities?

28-Mar-2011

INCOME TAX AND CORPORATION TAX

If you have payments due now or in the near future, the sooner you get in touch, the sooner HMRC can begin working with you to find a solution. They may, in some circumstances, allow you additional time to pay.

If your payment isn't due yet, you can call the support service nearer the time once you are clear about whether you will be able to pay or not. But remember that you need to get in touch with HMRC in advance of the payment deadline date. Don't wait until the payment is overdue.

Even when you can't pay in full you must send any returns in on time. If you don't you may have to pay penalties.

Who to contact:

HMRC's Payment Support Service on Tel 0845 302 1435 – this service is available for individuals and businesses who have not yet received a payment demand.

Opening hours are Monday to Friday 8.00 am to 8.00 pm, Saturday and Sunday 8.00 am to 4.00 pm, excluding bank holidays.

Information you'll need to provide

HMRC will want to know:

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
Note that you can still ask HMRC to consider a payment arrangement even if they contact you first.

What will happen when you contact the support service

You will need 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
Depending on why you can't pay, how long you need to pay the rest and your payment history - HMRC will ask you a number of questions so that they can judge your ability to pay this debt and make future payments. You must tell the payment support service if you are receiving any repayments from HMRC.
HMRC will ask questions about your income and expenditure, your assets and the changes you are making so that you can return to making payments on time.

If you have been given time to pay before you will be asked more in-depth questions.

In more complex cases HMRC may ask for documentary evidence to consider the request for time to pay.

If you are having difficultly paying your VAT and you pay by the online VAT Direct Debit service, you will need to contact your bank to ask them to stop your next payment.

If HMRC gives you extra time to pay

HMRC can only agree time to pay where it believes that you are genuinely unable to pay in full and on time. Also that by allowing you extra time it will mean that you can pay what is due and you can return to making future payments in full and on time.

If HMRC agree time to pay they will encourage you to set up a Direct Debit payment plan over the phone to make sure that you don't miss any payments.

If you fail to make the agreed payments or don't keep your tax affairs up to date HMRC will cancel the arrangement and take legal action to recover the outstanding amount.

VAT - Late payment penalties/surcharges and time to pay agreements

VAT default surcharges will not be charged if you contact HMRC before the payment is due and HMRC agree a time to pay arrangement which you adhere to.

Entering into the time to pay agreement will not be treated as a default so it will not extend the 12-month rolling period nor will the default percentage increase because of the time to pay agreement. This is provided that the terms of the agreement are adhered to.

VAT returns must be submitted on time or this will be treated as a default and the 12-month rolling period will be extended.

Similarly, a surcharge/penalty can be avoided on a late payment of Income Tax where a time to pay agreement is entered into before the relevant surcharge/penalty date and the terms of the agreement are adhered to.


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