unable to pay self employment tax

[shanks]

Hello everyone,

I am a self employed and I filed my tax return for the year 2010-2011 in oct 2011 and it came up as I have to pay around £5,000....after I filed my tax I went abroad in october and I spent all my money and I came back in the last week of december and I got a letter from hmrc which says I have to pay my tax before 31st jan 2012 and at the moment I m struggling with finances so I spoke to the business support line and I have explained the situation to them they transferred my call to a debit management team and told them for time being ill pay £100.00 every month but once i catch up with my finances i ll clear the tax amount but they said they cant give me any payment plan option so I dont know what to do now I paid £100.00 so far and ill continue doing that for few more months but will this affect my credit rating and will it be an legal action against me for not paying the full amount on time ???? also I have not done any business since march 2011....

Thanks

Shanks..

[mullet]

I am afraid that you won't get much sympathy here, on the basis of

after I filed my tax I went abroad in october and I spent all my money

as you are expected to have made provision for the payment of your liability. I am not surprised that HMRC were unhappy with your offer of £100 with a non-specific promise to pay the balance "once you catch up with your finances".

In reality you probably need to borrow £5,000 to pay HMRC. Remember that surcharge of 5% applies to any amount still unpaid at 29 February, and that interest is charged on late payment. HMRC used to be quite generous with time to pay arrangements, but now generally only help people/businesses who are having payment problems through no fault of their own. Sorry if all that sounds unsympathetic, but it's the reality of the situation.

but will this affect my credit rating and will it be an legal action against me for not paying the full amount on time

Their first action is likely to be distraint - seizing your assets to be sold at auction. If that is not possible or if it fails, they will take action in the County Court. And that could result in a CCJ and yes it would affect your credit rating.

[nikkisizer]

[quote="shanks"]
also I have not done any business since march 2011....

Hello shanks,

This important and valid point has been overlooked here.

Assuming you are still self employed it is quite likely that for the current tax year you 2011/2012 you will have made a loss.

Losses can be carried back to previous tax years and set off against tax owing in those tax years meaning you may not have to actually pay £5,000 overall.

I am happy to help if required so please do not hesitate to contact me should you require any further assistance.

[mullet]

Assuming you are still self employed it is quite likely that for the current tax year you 2011/2012 you will have made a loss.

Possible, not likely. Only if the business is really continuing and there are ongoing expenses incurred wholly and exclusively ...