Our friend the tax man ( just had a visit)
Discussion
Just had a visit from a nice lady from the revenue, business has been tough and I owe about £12K in PAYE and about £5K corp tax. She came about the Paye , told me I have until Jan 24th to pay then court. I have about £30K owed to me at the moment most of it due in by the end of the month but as I need it it is almost certain to turn up late. I've not been in this situation before ( I've been running my own business for about 8 years, biz was terrible through the summer hence cashflow problems now ) how much room for manouvre do I have? can I negotiate payment terms? I am in a Ltd Comp arrangement only one employee. Comments welcome.
My experience of the Revenue is that you pay them. I doubt very much they'll agree to allow you to pay over time.
I suspect your best shot is a loan.
BUT
So - do you owe 12K of PAYE? How did this PAYE liability come about? Have you declared to them this amount and then just not paid it? Or did they make the number up?
If they've made the number up and you can submit more accurate records that show you owe less PAYE than that then maybe that would help?
Remember - as a Director you can take money out of the firm via a range of methods. You can even *loan* yourself money from the firm temporarily - provided you pay it back.
Get some professional advice. A.s.a.p. They may well be able to help you fix this for less...but fixed it must be because the Revenue take no prisoners.
I suspect your best shot is a loan.
BUT
So - do you owe 12K of PAYE? How did this PAYE liability come about? Have you declared to them this amount and then just not paid it? Or did they make the number up?
If they've made the number up and you can submit more accurate records that show you owe less PAYE than that then maybe that would help?
Remember - as a Director you can take money out of the firm via a range of methods. You can even *loan* yourself money from the firm temporarily - provided you pay it back.
Get some professional advice. A.s.a.p. They may well be able to help you fix this for less...but fixed it must be because the Revenue take no prisoners.
Jo,
I had almost exactly the same problem at the beginning of the year.
My sister/accountant wrote a sob letter to the IR laying out the circumstances and offering to pay back at a manageable rate - for us around £1k per month exc N.I, and they were quite happy to accept it.
We've cleared the debt early and everyone is happy.
Maybe your IR lady was having a bad day, try again.
Best of luck mate. Business is tough and you need all the advantage you can get!
I had almost exactly the same problem at the beginning of the year.
My sister/accountant wrote a sob letter to the IR laying out the circumstances and offering to pay back at a manageable rate - for us around £1k per month exc N.I, and they were quite happy to accept it.
We've cleared the debt early and everyone is happy.
Maybe your IR lady was having a bad day, try again.
Best of luck mate. Business is tough and you need all the advantage you can get!
As has already been asked - is the PAYE amount due genuine i.e. is it based on actual salaries paid or was it estimated by the Inland Revenue?
The same goes for the Corporation Tax - is it a genuine liability based on the taxable profits of the company or is it based on estimates by the Revenue. If the Corporation Tax amount is genuine, did you ensure when calculating these Corporation Tax liabiliies that the company availed itself of all the reliefs, allowances etc that it can claim?
From what you are saying, your company seems to have some very doubtful debts, maybe even bad ones. Have these debts been written off in the company's profit and loss account for tax relief purposes and VAT reclaim purposes?
So many questions?
What is your accountant doing for you at the moment? He should be advising you on what actions yuo can take.
The Inland Revenue are actually quite acceptable to paying arrears over staged payments in a fixced time period (usually six months)- provided the payments schedule is kept to AND current liabilities are cleared in full as they fall due.
>> Edited by Eric Mc on Wednesday 11th January 13:49
The same goes for the Corporation Tax - is it a genuine liability based on the taxable profits of the company or is it based on estimates by the Revenue. If the Corporation Tax amount is genuine, did you ensure when calculating these Corporation Tax liabiliies that the company availed itself of all the reliefs, allowances etc that it can claim?
From what you are saying, your company seems to have some very doubtful debts, maybe even bad ones. Have these debts been written off in the company's profit and loss account for tax relief purposes and VAT reclaim purposes?
So many questions?
What is your accountant doing for you at the moment? He should be advising you on what actions yuo can take.
The Inland Revenue are actually quite acceptable to paying arrears over staged payments in a fixced time period (usually six months)- provided the payments schedule is kept to AND current liabilities are cleared in full as they fall due.
>> Edited by Eric Mc on Wednesday 11th January 13:49
If you are owed lots of money then consider factoring it.
Lloyds TSB do a service whereby then will give you 90% of the value of your outstanding invoices immediately and then the rest (less their fees, obviously) when the invoices are actually paid.
See www.lloydstsb-factoring.co.uk for more details. I should point out I haven't used the service though, so this is not a recommendation or endorsement.
>> Edited by JonRB on Wednesday 11th January 13:57
Lloyds TSB do a service whereby then will give you 90% of the value of your outstanding invoices immediately and then the rest (less their fees, obviously) when the invoices are actually paid.
See www.lloydstsb-factoring.co.uk for more details. I should point out I haven't used the service though, so this is not a recommendation or endorsement.
>> Edited by JonRB on Wednesday 11th January 13:57
I have big issues with factoring - it's expensive, it's terribly difficult to account for the monies received and, worst of all, if the customer is a really BAD payer, the factoring company gives up, takes the money back they gave you in respect of that customer and then tell you to chase the customer yourself!
Avoid factoring unless you are really, really desperate.
Maybe your normal credit control just needs a bit of a tweaking.
Avoid factoring unless you are really, really desperate.
Maybe your normal credit control just needs a bit of a tweaking.
Eric Mc said:
As has already been asked - is the PAYE amount due genuine i.e. is it based on actual salaries paid or was it estimated by the Inland Revenue?
The same goes for the Corporation Tax - is it a genuine liability based on the taxable profits of the company or is it based on estimates by the Revenue. If the Corporation Tax amount is genuine, did you ensure when calculating these Corporation Tax liabiliies that the company availed itself of all the reliefs, allowances etc that it can claim?
From what you are saying, your company seems to have some very doubtful debts, maybe even bad ones. Have these debts been written off in the company's profit and loss account for tax relief purposes and VAT reclaim purposes?
So many questions?
What is your accountant doing for you at the moment? He should be advising you on what actions yuo can take.
The Inland Revenue are actually quite acceptable to paying arrears over staged payments in a fixced time period (usually six months)- provided the payments schedule is kept to AND current liabilities are cleared in full as they fall due.
>> Edited by Eric Mc on Wednesday 11th January 13:49
Half the PAYE is accurate as its what was due at the end of last year, their estimates for this year is too high and I will have accurate figures today. Corp tax is accurate. Paying everything in one lump may cause more problems so you have answered my question really on the stage payments side. Once I know what my PAYE liability is properly I can plan accordingly. I have to say that in contrast to Customs and Excise I have always found the revenue reasonable as long as you don't say you are going to do something and then don't.
Eric Mc said:
THe VAT people will accept staged payments too. I've organised many such payment schedules for clients over the years.
As of April 2005, the VAT and tax authorities are now one and the same - HM Revenue and Customs.
Might be one and the same but they still don't talk to each other. But thats an aside. Thanks for all your help.
They're already sharing data - we were assisting a client with a VAT deferral recently - turned up at the meeting and they (HMC&E) placed a copy of our agreement with IR on the table and said 'Now explain to me why you're paying them in 4 months, yet need 18 from us'
We did, but it was hard going. They definitely wanted the same.
Factoring such a small debt for such a short period is probably impossible and as Eric has said, in general it is very expensive - although approporiate in some situations.
I am really surprised over the attitude - I would have thought if you made a formal proposal to pay over a deferred period, and this is your first deferral, and you can supply a cash flow showing clearly that the receipt of funds due end month will cover the debt then they'd be OK.
We did, but it was hard going. They definitely wanted the same.
Factoring such a small debt for such a short period is probably impossible and as Eric has said, in general it is very expensive - although approporiate in some situations.
I am really surprised over the attitude - I would have thought if you made a formal proposal to pay over a deferred period, and this is your first deferral, and you can supply a cash flow showing clearly that the receipt of funds due end month will cover the debt then they'd be OK.
Quite correct - I wonder if he made his application for the deffered payments directly or whether he used his accountant. Generally, the tax authorities are often more willing to listen to an argument put forward by the accountant as the accountant will talk to them in terms they understand.
Had a similar problems a few years ago as I was behind in PAYE payments to a similar tune. It had arisen because we had had some awful advice from our accountants who we had fired a few weeks before the chap from Bradford arrived.
It was repaid in several stages and we didn't need to go through our new accountant. The revenue were more than happy to come to this agreement as they actually said at the time to me that there was nothing to gain in busting a small business and getting nothing when they could accept a scheduled repayment so that the business could continue.
It was repaid in several stages and we didn't need to go through our new accountant. The revenue were more than happy to come to this agreement as they actually said at the time to me that there was nothing to gain in busting a small business and getting nothing when they could accept a scheduled repayment so that the business could continue.
Gassing Station | Business | Top of Page | What's New | My Stuff