Paying PAYE/VAT/Self-assessment tax or corporation tax?

Apr 25, 2024 | Corporation tax

In the UK, taxes like PAYE, VAT, self-assessment, and corporation tax are vital contributions to the country’s infrastructure and public services.

However, sometimes, businesses and individuals are unable to meet these obligations on time. Here’s a guide on what steps to take if you find yourself in this situation.


Early communication with HMRC

The first step if you anticipate or encounter difficulty in paying your tax bill is to contact HMRC as soon as possible. It’s crucial to do this before the payment is due or immediately after missing a deadline to avoid penalties and further complications. HMRC may offer several solutions, such as extending your payment deadline or setting up a payment plan, known as a Time to Pay Arrangement, which allows you to pay your tax in instalments​.


Time to Pay Arrangement

This arrangement is available if you owe £30,000 or less, can pay off the debt in less than 12 months, and have no other tax debts or HMRC payment plans in place. To set up a Time to Pay Arrangement, you should propose a plan to HMRC detailing how much you can pay immediately and how you will cover the rest of your bill. Note that interest will be applied to any tax which is paid late, even under a payment plan​​.


Payment methods

If you need a straightforward and secure method to pay your taxes, the HMRC app might be the ideal solution. Available for both Android and iOS users, this app simplifies the process of tax payment and self-assessment tax return completion. You can directly make payments to HMRC, ensuring they are received promptly. The app’s design focuses on user-friendliness and security, providing peace of mind that your financial details are protected.

Additionally, it integrates seamlessly with your tax records, helping you manage your tax obligations efficiently and reducing the chance of errors during a stressful tax period​.

What if you cannot set up a payment plan?

If HMRC believes that you won’t be able to keep up with the arrangement’s payments, they might refuse to set up a payment plan. In such cases, they will ask you to pay the full amount immediately. This highlights the importance of providing a realistic proposal that fits your financial situation​.


Handling VAT and corporation tax

The steps for VAT and corporation tax are similar, and prompt communication and transparency with HMRC are vital. For corporation tax, in particular, ensure that your company’s tax returns are up to date and accurate to prevent misunderstandings or errors in calculated tax owed. Payment plans are also available for these taxes under similar conditions to those for self-assessment​​.


Legal and financial advice

It’s often beneficial to seek advice from a tax professional or accountant. These experts can offer guidance tailored to your specific situation, help you negotiate with HMRC, and ensure that your payment proposals are feasible based on your financial standing. They can also help avoid potential pitfalls, such as underestimating your tax liability or misunderstanding complex tax regulations​​.


Get help

Paying taxes can be stressful, but taking proactive steps can help manage the situation effectively. Early engagement with HMRC, exploring payment options, and consulting with tax professionals are critical actions that can ease the burden.

Always remember, it is better to deal with tax issues head-on rather than delay, as this can lead to increased penalties and less flexibility in managing the payments.

At Blue Shore, we’re here to ensure that you are not alone in dealing with these aspects of finance. We can help you achieve peace of mind so you can focus on your business’s growth and strategy.

Get in touch to find out how we can help.

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Let’s get started, as soon as you’re ready. We’re always up for a chat about how we can support you and your business.

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