Bennett Jones can point you in the right direction, giving you the information you need to minimise the risk of penalties, deductions from your pay, and even Court proceedings including bankruptcy.
How does income tax and VAT debt start?
Employed workers have income tax automatically deducted from their wage/salary (the more you earn, the more you’ll have to pay). However, the self-employed need to prepare and file with HMRC their own tax returns, calculating the amount of income tax for which they’re liable. Advance payments, known as Payments on Account, may also need to be made.
It’s all too easy to fall into income tax or VAT debt. Given that the amount you owe is subject to change every year, underpayment is a realistic problem.
What can I do to avoid income tax and VAT debt?
Ensuring you’re on the right tax code is important, and you may need to contact HMRC to gain a better understanding of what you owe. If you are self-employed, it’s good practice to put money aside for income tax every month – 20% of your earnings if you’re a basic rate taxpayer.
HMRC won’t tolerate late payments, so you need to act quickly if you’re behind on your income tax or VAT. By being proactive, you might be able to avoid penalties and set up a payment plan you can afford.
I’m facing income tax and VAT debt. What should I do?
Talk to Bennett Jones and we can assist. We’ll take the time to understand your situation and provide support that’s right for you.