Act now to negotiate extra time to pay January tax


Lisa-Ball-smallThe 31 January tax deadline is looming. Lisa Ball, tax partner at accountant Smith & Williamson, explains how to negotiate with the taxman when cash is tight.

  • If you have exhausted attempts to reduce tax by using farmers’ averaging and reducing 2014-15 tax payments on account, yet the tax bill remains beyond reach, there may be scope to negotiate “time to pay”.
  • This potentially allows you to spread the self-assessment tax bill over several months. It could be longer, but will rarely be longer than a year. In exceptional cases, deferred payment may be negotiated.
  • All agreements are at HMRC’s discretion and are individually negotiated over the phone.
  • They are based on what you can afford.
  • The larger the liability or the longer required to pay, the greater the risk for the taxman. More detail will be requested in such cases.
  • HMRC will ask about income and expenditure, assets, savings and investments and how you will get finances back on track.
  • If you genuinely can’t pay now, HMRC will encourage you to set up direct debit payments for agreed dates – generally the shortest possible timeframe.
  • If you miss negotiated payments, HMRC can withdraw the plan, but it may be possible to renegotiate.
  • HMRC will charge interest over the period of underpayment, but agreeing “time to pay” will avoid a 5% penalty on outstanding sums for 2013-14.

If you can show Basic Payment Scheme payment or milk income is due, this may be sufficient to explain why cashflow has been stretched. Don’t wait for the 5% penalties to be incurred at the end of February; the time to negotiate is now.

Are you, like many other farms, missing out on tax claims for R&D?

If you’re a limited company, you could be eligible for tax credits if you’re carrying out R&D on your farm. For more information and to find out if you’re eligible visit our R&D tax credits page.

Find out more
See more