Taxpayers need to think now about their likely income this year so that they can warn HMRC if they need time to pay, according to Blick Rothenberg.
The tax and advisory firm suggested taxpayers should think about the tax they are going to need to fund in January and that if they conclude they will not be able to pay because of lack of income due to COVID-19, they should let HMRC know immediately.
HMRC has said that July tax payments for anyone who pays by self-assessment can be delayed until January, but if they have the money, Blick Rothenburg is urging them to pay now so that they are not faced with a double bill.
The firm stated that “many will still be worried” that even if they pay now, they may not be able to pay what they owe in January.
“If they alert HMRC then they will be able to get a pay arrangement. HMRC will be sympathetic to what has happened to people’s finances but the earlier they are told the better it will be for both parties,” Blick Rothenburg tax dispute resolution partner, Fiona Fernie, commented.
“Understandably, most people are primarily thinking about how to pay the mortgage and put food on the table, but it is important to remember that the postponement of the 31 July 2020 payment on account merely delays the liability; it does not wipe it out.
“Taxpayers will still have the problem of how they fund their tax bills in January 2021, potentially before they have seen a full recovery of their business. It is vital that they think now about how they will cope so that if necessary, they can approach HMRC for a Time-to-Pay arrangement before they face an imminent deadline.
“If they do not do this, it could be difficult in January and HMRC will not be so sympathetic and could launch inquiries which will be time-consuming for HMRC and stressful for the taxpayer. All that is required is a sensible piece of housekeeping.”
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