Nearly 700,000 individuals and firms have entered into tax payment plans after getting into arrears on their tax payments.
A ‘time to pay’ arrangement allows taxpayers to pay taxes owed over an agreed period, but they have to be negotiated and can be difficult to set up. Most last for only a year, which may not be enough time to repay a tax debt. HMRC has said plans can be spread over more than one year and that they work on a case-by-case basis. Tax repayment plans are also subject to interest charges, with the rates payable determined by the length of time the debt has been outstanding, compounding the original problem.
While the loan charge was initially also cited as a reason for the level of time to pay arrangements, HMRC cites a separate set of arrangements available for those dealing with loan charge repayments. The loan charge was put under review in September, although publication of the review’s findings has now been delayed due to the election. With a deadline of January 2020 for settling claims under the charge, HMRC is now under pressure to push the date until the outcome of the review.
The lesson from these stark figures is how important it is to plan for covering your tax payments where you know what they are likely to be. If you are self-employed, a contractor or a small business, estimate how much you need to set aside each month to build up a tax fund.
While there are payment options in place, they could end up costing you more than you originally owed amid the added stress of balancing your books. If you need any help with your tax payments, please contact us sooner than later.
Founded in 1934, Bright Grahame Murray is Kensington’s leading Chartered Accountancy firm. At BGM we address the specific objectives of each client and draw together the specialist skills and expertise of the most appropriate Partners and staff to help our clients achieve their goals. We do this by providing a comprehensive range of services including accountancy, tax, corporate finance and business advisory. Our clients range from private individuals to multinational corporations. We ensure our clients benefit from a personal and expert service whatever their size or sector.