Finding out you’re going to owe HMRC an arm and a leg (and then some) can be a worrying time and induce sleepless nights in even the most cool-headed business owner.
Here at Bibbys we’ve put together some ideas to help make things more manageable.
1) Speak to the tax office
It seems obvious but not that many people actually know that you can contact HMRC at their Business Support Line on 0300 456 3565. Get on the phone to them and they may be able to offer you a payment plan which will help break the expense into less scary instalments.
2) Make the most of the full payment period
The self-assessment tax liability payment is due by 31 January of each year. However HMRC do allow a further 30 days for payment after this date before issuing a payment penalty, which is 5% of tax due, plus another 5% at 6 months and another at 12 months. So keep that in mind if you’re worrying about having funds ready on the dot.
3) Weigh up your credit options
Many business owners get very stressed at the idea of owing HMRC money and fear hefty fines. However, HMRC charge an interest rate of 3%, which is lower than many credit card and loan rates. This is definitely worth considering when trying to figure out how to pay your liability. Talk to your accountant who will be able to look at your options and advise you on the best plan.
4) Had a difficult year? Adjust your next payment on account
Sometimes you just have a tough year. Be sure to review your level of profits on the 31st March, if this is your year end. If they are lower than the previous year you may be able to reduce your second payment on account due in July. However this must be done before 31 July, so don’t put off reviewing it.
If you’d like to find out more about what we can offer you and your business here at Bibbys, just get in touch to arrange a complimentary consultation with one of our Qualified Accountants & Business Advisors.