We understand that it is not always possible to settle your tax bill on time. This may be because of a change in circumstances or an unexpected tax bill.

If you do not inform HMRC, it will commence enforcement action, which can range from calls or visits to your address from HMRC’s Debt Management team, right up to bankruptcy action, in the worst case. In addition, penalties will be applied to the liability.

In order to prevent these outcomes happening, agreeing a payment arrangement with HMRC is recommended. Providing an agreement is reached and adhered to, penalties for late payment will not be applied and enforcement action not taken. A payment arrangement will depend on your circumstances; it may be an ongoing monthly payment until the liability is settled or a more bespoke solution which may involve relatively small initial payments whilst awaiting a property sale or completion of probate to allow the substantial liability to be settled.

We have assisted clients in a range of difficult situations, allowing them to manage challenging cash flow positions, to continue their businesses and to remove the spectre of HMRC’s debt collectors.

It is important to note that late payment interest will apply to any tax liabilities paid late and this cannot be avoided by agreeing a payment arrangement with HMRC. Only payment of the liability can stop further interest accruing.

Contact Danielle Ford, Partner and Head of Tax Disputes & Resolutions, or Riocard Hoye, Senior Manager.