What You Should Do If You Can Not Pay Your Taxes

Tax problems can occur for many reasons and sometimes a tax problem can result in a substantial sum that can not be paid immediately. If you are in the position in which you owe taxes to the government and are unable to pay the bill there are a few possible options. They include the following;

If you have received a notice or have been inspected and an assessment has been made to pay a certain amount, the first thing you should do is go over the bill to make sure that it is correct and that you have no discrepancies regarding it. If there is a discrepancy, you should immediately seek legal council and dispute the assessment. However, if the bill looks thorough and correct, you will be required to pay the amount in its entirety. If it is a substantial amount and you do not have the funds to pay it, you may seek to make a payment agreement.

In order to request a payment plan, you should first contact the HM Revenue and Customs office (HMRC). You can also contact the Payment Helpline via telephone at 01274 539 628. It should be noted that ignoring a payment request is not a good option and will only cause HMRC to take legal steps to ensure it is receives payment. This can also include stiff penalties and interest.
Payment Options Offered by HMRC

Generally speaking, two types of payment options can occur, they are a lump sum payment to be sent at a certain date in the future or a series of installments. Once a repayment plan has been agreed upon by both you and HMRC, a letter will be sent to you confirming the details.

If you are able to make a payment in full, you will usually be given 28 days to do so without any further actions taken. Longer periods of repayment may require that you give certain financial information to HMRC. This financial information can include the following;

* Assets in your savings accounts (This information is usually requested for payment plans that extend up to 3 months)
* Your current income, the amount of money that you spend monthly and if you own any assets, etc (this information is usually requested for payment plans that extend longer than 3 months)

It should be noted that all payment plans for late taxes will incur interest. The current rate for self assessment taxpayers is 6.5%
Considerations When Arranging a Payment Plan with HMRC

It is important to note that HMRC can in certain cases reject a payment plan from a tax payer. If you feel a reasonable and realistic payment arrangement was made and rejected, you have the right to appeal their decision.

It should be noted that if you have not sent in your tax return, HMRC will not arrange a payment plan until you do so. For instance, if you have not filed a return for the last three years, you will be instructed to do so before any discussion on a payment plan will take place. In addition for those that have not sent in a tax return, you will usually incur a penalty for late filing and the payment amount will have been estimated by HMRC.
For those that Do Not Take Action on Their Owed Taxes

If you ignore HMRC and still can not pay your taxes and do not discuss with them possible options, legal action will be taken against you to collect any monies owed. This action will usually be through your local recovery office. Even if legal action has begun, you can still contact HMRC and discuss a proposed repayment plan.

For those that are unable to pay your tax bill, free advice is available. You can contact either the Citizens Advice Bureau or Tax Aid.

Back to Top

Source: http://www.desktoplawyer.co.uk