Charterhouse Blog

Outstanding Tax Liabilities

If you can’t pay your taxes what will happen when you contact HM Revenue & Customs (HMRC)?

If you have ever been in a situation where you have outstanding tax liabilities and feel that you can't make payment then you might be wondering what your position is and how you might be able to move forward.

Firstly you will need to explain:

  • why you are unable to pay your taxes 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

If this discussion reveals that you are able to pay immediately in full you must do so. The HMRC adviser you speak to will be able take a payment over the phone, either by Direct Debit or debit/credit card, or they can advise you on other payment options available.

If you are unable to pay immediately HMRC will want to ask you a number of questions to judge your ability to pay off your debt whilst paying ongoing liabilities. 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 previously been given time to pay you will be asked more in-depth questions.

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

If HMRC allows you extra time to pay

HMRC will only agree time to pay where they believe you are genuinely unable to pay in full.

When allowing extra time to pay HMRC will help people to schedule their debt payments so that they can pay what is owed and return to making future payments in full and on time.

As part of this process you are expected to investigate and seek other sources of finance and/or take action to restructure your business and/or personal affairs to enable you to meet your statutory tax obligations.

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

HMRC is responsible for making sure that money is available to fund the UK's public services and expects people to pay their tax in full and on time.

Charterhouse is a dynamic accountancy practice offering leading-edge tax expertise to businesses located in London, Berkshire, Buckinghamshire, Middlesex and throughout the UK. Charterhouse writes blog articles to help provide expert advice on tax management and other financial matters.

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