Overdue Corporation Tax Letter From HMRC – What to Do

Dealing with an overdue corporation tax letter from HMRC: what businesses should do

Running a business entails various responsibilities, including managing finances and complying with tax regulations.

It is not uncommon for companies to receive letters from HM Revenue and Customs (HMRC) regarding overdue corporation tax payments as this can often be overlooked by busy business owners.

While this situation may be unnerving, it is important for business owners to approach it with a calm and strategic mindset. In this article, we will discuss the steps that a business should take when faced with a letter from HMRC about overdue corporation tax.

Read the letter carefully and understand the issue:

The first step is to carefully read the letter received from HMRC. Take note of the deadline and the amount of tax owed. Understanding the specific issue and the reasons behind the overdue tax is crucial.

It could be an error in the tax calculation, missed deadlines, or a more serious issue. By grasping the details, you can move forward with an informed plan of action.

Gather relevant documentation relating to corporation tax:

To effectively address the situation, gather all relevant documentation related to your company’s tax affairs. This includes previous tax returns, financial statements, and any other supporting records.

Having this information readily available will be beneficial when communicating with HMRC or seeking professional advice.

Assess the validity of the claim:

Before making any payments, it is important to ensure the accuracy of HMRC’s claim. Mistakes can occur, and it is possible that HMRC may have made an error in their calculations or misinterpreted certain information.

Compare the amounts stated in the letter with your own records to identify any discrepancies. If you find a mistake, it is crucial to notify HMRC promptly and provide supporting evidence to rectify the situation.

Contact HMRC for clarification:

In many cases, it is best to contact HMRC directly to seek clarification on the matter. HMRC has dedicated helplines to assist businesses with their corporation tax queries.

Be prepared to provide your business’s Unique Taxpayer Reference (UTR) and any other relevant information when contacting them.

Engaging in open communication demonstrates your willingness to resolve the issue and may help in negotiating a payment plan if necessary.

Seek professional advice:

If the issue seems complex or you are uncertain about how to proceed, seeking professional advice from a qualified tax advisor or accountant is highly recommended.

They can review your company’s financial records, assess the situation objectively, and provide valuable guidance tailored to your specific circumstances. They can also assist in liaising with HMRC on your behalf, ensuring proper representation and increasing the chances of a favourable resolution.

Consider payment options:

Once the issue has been clarified and you are certain about the outstanding tax liability, it is essential to explore payment options.

If your business is facing financial constraints, you may be eligible for a Time to Pay arrangement with HMRC. This allows you to spread the tax payments over an agreed-upon period, easing the burden on your company’s cash flow.

Alternatively, if your business can afford to make the full payment, it is advisable to do so promptly to avoid additional interest or penalties.

Maintain accurate records and timely tax compliance:

To prevent future issues with HMRC, it is crucial to maintain accurate financial records and meet all tax obligations on time.

Implementing robust accounting systems, utilizing professional help, and staying informed about changes in tax regulations will help ensure that your company remains in good standing with HMRC.

Get free, no-obligation advice

Receiving a letter from HMRC about overdue corporation tax can be a cause for concern, but it should not be a cause for panic.

By following the steps outlined above, businesses can effectively address the issue, rectify any errors, and maintain a positive relationship with HMRC. Timely communication, careful assessment of the situation, and seeking professional help.

If your company is struggling with unmanageable HMRC debts, poor cash flow, or an uncertain future, you are not alone.

We speak to company directors struggling with the same issues as you every single day, and we are here to give you the help and guidance you need.

Call our team for free, no-obligation advice today on 0800 975 0380 or book a free consultation