HMRC Payment Plans
Finding the cash to settle your taxes can sometimes be tricky. With all the will in the world, the VAT you’ve been collecting on behalf of HMRC for the last three months just isn’t sat in your bank account. This is where considering HMRC Payment Plans can be beneficial.
Exploring Alternatives to Traditional HMRC Payment Methods
HMRC have (since charging for credit card use was banned) stopped taking personal credit cards. So what can be done since your flexible friend isn’t an option anymore? There are finance businesses that provide short-term lending to allow you to pay your tax bill, leaving you to pay the lender rather than HMRC in instalments. It’s not cheap, but it stops you from telling HMRC that you don’t have the money to pay them, which might not be easy for you. This is essentially an alternative to the official HMRC Payment Plans.
HMRC do allow you to set up a time-to-pay arrangement on some conditions, often referred to as HMRC Payment Plans. The conditions aren’t always clear but effective if you can demonstrate that 1) you don’t have the money and 2) it’s not because you’re on a huge salary (they don’t like this), you are in for a good chance of being able to spread your payments over a number of months.
You will have to pay interest on the balance since it’s effectively borrowing, but it’s not a particularly high interest rate. If you miss a payment or are late with future tax payments, HMRC reserves the right to cancel your HMRC Payment Plan arrangement and expect it to be settled immediately.
In our experience, HMRC’s various departments don’t talk to each other, so it’s possible to have time to make arrangements for VAT and PAYE, for example. The downside is that they might not want you to – and when they ask you if you’re behind with other taxes, you need to declare that you are if this is the case.
An easy way to avoid time-to-pay arrangements, certainly in your early years in business, is to put a percentage of your income aside as you receive it. Challenger banks such as Monzo have facilities that allow you to do this automatically, which is a brilliant function. This proactive approach can help you avoid needing HMRC Payment Plans in the future.
Navigating the intricacies of tax payments and HMRC regulations can be daunting. But remember, you don’t have to go it alone. At MNE Accounting, we’re here to guide you every step of the way, ensuring you make informed decisions and stay compliant. Whether you’re considering HMRC Payment Plans or seeking comprehensive accounting solutions, our team of business accountants is ready to assist. Don’t let tax worries keep you up at night; contact MNE Accounting today and let us simplify the complexities for you.
