Most people will be aware of the upcoming July deadline to pay your payments on account to HM Revenue and Customs. However, are you aware that you may be able to reduce the amount you pay?
The amount due at 31st July 2009 is half of the liability from the tax year ended 5 April 2008. These were based on profits made during that year (dependant on staggered year ends of course). At that time we were not in the global recession of today and most businesses were making decent profits.
Move on a year and for the tax year ended 5 April 2009 most businesses will have seen a downturn in their profits.
If your profits are reduced your tax liability is also likely to be less than last year. Hence, your payments on account will be greater than your tax due. This means that you may be entitled to a refund when you file your tax return.
Would it not be better to not pay the higher amount at all?
There are two ways of reducing your July payment on account. The first is to prepare and file your tax return before 31 July 2009 and just pay an outstanding liability by that date. Your tax account will be up to date and no payment (other than next POA will be due in January 2010.
The second is to put a claim in to reduce the payment on account. Your accountant should be able to do this using their online software. Alternatively you can go the HMRC website and download the form to send in. Be wary about reducing it to levels below the tax you are likely to pay as interest could be applied.
If you feel you have had a downturn in profits and you want further information feel free to contact me.
July 7, 2009 @ 2:38 pm
Top tips! Thanks for this Phil