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Any tax for the tax year ended 5 April 2007 remaining unpaid at 31 January 2008 will attract interest. A further penalty of 5% of the tax unpaid is normally applied for any tax unpaid at 28 February 2008, and a further 5% if still unpaid at 31 July 2008, but with timely action we may be able to prevent this. Similar arrangements applied for earlier years.
The department of HMRC, previously known as the Collector of Taxes, has been renamed the Receivables Management Service. For those with difficulty paying their tax liabilities, this change of name has unfortunately been accompanied by a hardened change in attitude.
The Collector of Taxes would often have accepted payment of tax by installments, but the Receivables Management Service will require written details of your income, expenditure, assets, and liabilities, before a Recovery Officer will consider a payment arrangement.
The Inland Revenue booklet SA357(Shipley) invites taxpayers who cannot pay on time to contact the Accounts Office Shipley for advice on 01274 532007.
We recommend early action where necessary and not to wait until recovery action is being threatened. The Inland Revenue website makes reference to examples where payment arrangements are agreed with post-dated cheques accepted and surcharges reduced .
Unless you can arrange a formal payment arrangement, it will probably be in your interest to borrow money to pay your tax liability, and the Recovery Officer expects you to do this. The Inland Revenue will charge you interest on any unpaid tax, currently at 6.5%. However they may also charge you the 5% penalties on 28 February and 31 July. The combined cost will normally exceed a competitive overdraft or personal loan interest rate.
For filing penalties see Self Assessment.
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