With the deadline for self-assessment having passed on 31st January, HMRC would assume that all tax returns are submitted and tax bills settled. Failure to do so would lead to additional charges and penalties. However, if you are stuck with trying to pay your liabilities there are a few options.

Extending the Payment Deadline

If you become aware that you will not be able to settle your tax bill by the deadline, notify HMRC immediately and agree payment terms and arrangements.

HMRC usually like to come to an agreement as it means that there is a provision for recovering their monies owed. You should always try and reach an agreement before deadline as that would increase the likelihood of HMRC reaching an agreement significantly. It might be possible to get an agreement even after the deadline but that can be more time consuming.

HMRC will not reach an agreement without getting an understanding about your income, expenses, assets and any savings and investments. You must also present a detailed case of the steps you will be taking to settle your tax bill.
You should have the below information ready before speaking to HMRC:

  • Reference Number
  • A breakdown of what you can settle immediately and the amount you cannot pay. Paying off a larger sum off immediately will almost always work in your favour.
  • Time scale to pay off the pending amounts.
  • Steps taken to arrange for the liability to be settled.
  • Any extenuating circumstances.
  • Bank account details.

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All the information you provide to HMRC when speaking to them will be used to determine if you should pay any amount immediately.

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Should HMRC agree to give you more time to pay, they might enquire about your spending habits and earnings of any family members. If due to unforeseen events/circumstances you are unable to pay, make sure HMRC is made aware of it. Customers going insolvent or a sudden and expected medical bill due to personal reasons will be analysed by HMRC differently as these circumstances were unplanned for.

Voluntarily not paying taxes due

It is good to note that, while there will be late payment fees and fines, HMRC can also take any steps they deem necessary to recover the money from you. HMRC dues must therefore always be given top priority.
Failure to reach a payment agreement with HMRC or failure to pay your liabilities can lead HMRC to;

  • Auction your possessions
  • Take money from bank account
  • Seek legal action
  • Forcefully shut down your company

HMRC do not always follow the list above in that order but they do take whatever action they deem necessary to recover the money owed.