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Home Business and self-employed Business tax. Corporation Tax. Brexit Check what you need to do. The sooner you contact HMRC and make them aware of your situation the more options will be open to you and the less likely you are to face penalties or court action. As soon as you know you will be unable to make the payment, notify HMRC of this as much in advance of your corporation tax being due as possible; the very worst thing you can do is ignore the situation and delay taking action until the bill is overdue and you have fallen into arrears.
Once it gets to this stage, HMRC will be much less inclined to enter into negotiations with you, limiting your options significantly. If you need more time to get the money together to pay the amount in full, you may wish to enquire about the possibility of paying your corporation tax in instalments.
HMRC will consider requests from companies asking for additional time and may be able to help by setting up a payment plan known as a Time to Pay TTP arrangement. While any company can make such a request, the chances of this being accepted will depend on a number of factors including the amount owed, the likelihood of the company being able to adhere to the proposed monthly payments, and how the company has conducted its tax affairs previously. The conditions of each TTP arrangement differ depending on the company and the figures involved; however, typically a company will be allowed to clear their corporation tax arrears over a period of months in an affordable manner.
While a TTP plan can be a lifeline to many companies, only enter into one if you are confident in your ability to keep up with the monthly payments. Failure to do so will see the agreement terminated and HMRC will then be able to take steps to wind up your company. Therefore be realistic about what you can afford when approaching HMRC; if you know you are unlikely to be able to clear your arrears within 12 months then consider discussing your situation with a licensed insolvency practitioner who will be able to offer advice on more formal procedures such as a Company Voluntary Arrangement CVA which may be more appropriate for your financial position.
If the deadline for paying your corporation tax has already passed and HMRC are threatening to commence a winding up procedure or further court action, you need to act quickly to save your business. You can prevent the WUP turning into a Winding Up Order by disputing the amount HMRC claim you owe in corporation tax, or else prove that you are able to afford to pay back the money you owe and arrange for payment to be made.
If this is not possible, the other alternative to place your company into a formal insolvency procedure such as company administration or a CVA.
An administration process would temporarily halt legal action while the corporation tax debt is dealt with, while a CVA gives the company an opportunity to restructure and reduce existing liabilities by entering into negotiations with its creditors. Neither of these processes can be done without the help and guidance of a licensed insolvency practitioner who will not only be able to facilitate the procedure but also ascertain the best way for your company to deal with its current levels of distress.
If you are struggling with corporation tax or any other debts and you feel the situation is beyond rescue, you may need to consider ways of closing the business through a formal insolvency procedure. Perhaps you know your company will not be able to sustain the payments which are likely to be requested as part of a TTP arrangement, or the business has other considerable debts in addition to corporation tax arrears which you know the company is unlikely to be able to manage going forwards.
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This site uses cookies to monitor site performance and provide a more responsive and personalised experience. You must agree to our use of certain cookies. Corporation tax: What is it and what if you can't afford to pay? Bounce Back Loan Support. But dividends cannot be deducted as a business expense. When it comes to corporation tax, fortune favours the organised. If you pay your tax bill earlier than expected, HMRC will repay you some of it as interest at a rate of 0.
HMRC will usually pay interest from the date you pay your corporation tax up to the payment deadline. However, the earliest it will pay interest is from six months and 13 days after the start of your accounting period. Financial Services Limited. Financial Services Limited is a wholly-owned subsidiary of Which? Limited and part of the Which?
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In this article. Coronavirus Covid tax update What is corporation tax? Who pays corporation tax? Corporation tax deadlines How to pay corporation tax Corporation tax: late penalties How to reduce your corporation tax bill. Coronavirus Covid tax update The government has introduced a range of measures to support employed and self-employed workers, as well as small businesses that have been affected by the coronavirus crisis. Work out your tax bill. National Insurance calculator Income tax calculator Council tax calculator.
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