As the famous Benjamin Franklin quote goes, “nothing is certain except death and taxes”, and UK business owners can probably agree. As custodians of our companies, we’re responsible for all the tax liabilities that an active business accrues.
In fact, Franklin’s words could be altered slightly to read that nothing is certain, except that non-payment of taxes causes the death of businesses. It perhaps isn’t quite as snappy, but it’s certainly something that owners and directors should be wary of.
One man who knows the importance of tax payments for businesses is Nicholas Troth. As a TTP negotiator for business consultancy, Forbes Burton, he deals with HMRC every day, negotiating repayment plans on behalf of UK companies that have fallen foul of tax deadlines.
“Missed HMRC payments are one of the main contributors to corporate insolvencies in the UK. Large bills can come as a surprise to company owners and often need to be paid in one go”
Troth explained.
“While our specialist negotiation team has been able to save countless businesses from the chopping block, prevention is always better than the cure, and companies would do well to follow the tips below to avoid any penalties”.
Make calendar alarms and reminders
It’s not just late payments, but also late filing of tax returns that can land you in hot water. If you take care of your taxes in-house or by yourself, you’ll need to be aware of the deadlines to submit these. In general, for self-assessments, you have till the 31st January to either submit a return or pay tax that’s already owed. Those submitting paper returns have to do it earlier, by 31st October instead.
It's little use taking the final day of the deadline and putting this in your calendar though. You can guarantee that something will come up that prevents you acting on this prompt or even seeing it at all. You could be ill, busy with a client, or anything. Instead, set weekly reminders to take action as soon as you’re able to.
Hire an accountant
Of course, one of the easiest ways to take care of your tax responsibilities is to hand them over to a professional. Business owners are often spinning several plates at once, and as such, are more likely to make a mistake or miss a deadline. HMRC can issue penalties for unpaid taxes, understated information, over-claiming, or under-assessing so it can certainly pay to have a professional handle your books.
Be aware of the penalties
Just being aware of how a missed deadline or other issue can affect companies can spur owners into action. Some mistakenly think that like some suppliers, business owners can ring up, apologise, provide an excuse, and get away with paying a day or two late.
For Corporation Tax, for example, just being one day late will incur a £100 penalty. While they will consider what they deem “a reasonable excuse”, they tend to be fairly strict with these, and the excuse must cover the entire period that you have gone over the deadline. They expect that you pay your tax quite literally as soon as you’re able to.
If any details are incorrect with your Corporation Tax affairs, HMRC can charge up to 100% of the potential lost revenue if they believe this was deliberate. Even if they decide that the mistake wasn’t deliberate, they can still charge up to 30% for carelessness.
Different taxes have different penalty rates, but they all ramp up the longer they’re left unresolved. This is where companies can quickly find themselves saddled with bills much higher than they originally expected.
Concerned about HMRC payments?
Because late payments can quickly snowball into company-ending debts, it’s important to act as quickly as possible. Forbes Burton’s specialist HMRC negotiation service unlocks affordable repayment arrangements that can make previously insurmountable bills manageable. Find out more at Forbes Burton’s site.