Help if you are struggling to meet your tax bills

Tax bills can feel overwhelming, especially when cash flow is tight or circumstances have changed unexpectedly. Whether you’re a sole trader, partnership, or limited company director, struggling to meet your tax deadline doesn’t mean you’re alone—and it certainly doesn’t mean you have no options. At Severn Accounting, we work with businesses across Worcester and beyond who face genuine difficulties paying what HMRC demands. Here’s what you need to know about your options and how to move forward.

Understand Your Obligations Early

The first step is recognising exactly what you owe and when. If you’re self-employed and registered for Self Assessment, your tax return deadline is typically 31 January following the end of the tax year (5 April). For limited companies, Corporation Tax is due nine months and one day after your year-end. Missing these deadlines triggers penalties and interest, which compounds the problem quickly.

If you haven’t filed yet and you’re anxious about the amount, don’t bury your head. Filing late incurs an automatic £100 penalty, plus daily penalties of £10 per day after three months and further penalties of 5% of the tax due at six and twelve months. These penalties add up rapidly. The sooner you file—even if you cannot pay immediately—the better your position becomes.

Contact HMRC Before the Deadline

This is crucial: get in touch with HMRC before your payment deadline passes, not after. HMRC is genuinely more willing to work with taxpayers who contact them proactively than those who simply ignore bills.

You can ring the Self Assessment helpline on 0300 200 3310, or if you’re a company, contact the Corporation Tax team. Explain your situation honestly. HMRC may grant a short extension (typically 30 days) if your circumstances are temporary—redundancy, illness, unexpected business downturn, or a one-off cash flow problem.

If you cannot pay the full amount within that window, ask about a Time to Pay (TTP) arrangement. These allow you to spread payments over months, even several years in some cases. HMRC agrees to suspend interest and penalties while you’re on an approved plan, making the debt manageable and preventing it from spiralling.

Explore Time to Pay Arrangements

A TTP arrangement is informal and flexible. Once agreed, you make regular instalments—weekly, monthly, or quarterly—towards your debt. HMRC assesses your income and outgoings to agree a figure you can realistically afford.

The key advantage is certainty. You know what you’re paying each month, interest and penalties are frozen, and you avoid the stress of escalating enforcement action. Most TTP arrangements last between 6 and 24 months, though this varies.

To qualify, you’ll need to demonstrate that you’re in genuine difficulty but can pay something each month. HMRC won’t agree to arrangements if you’re simply being awkward or if you’re still incurring new tax debts while paying off old ones. Being transparent about your situation—and showing that you’re taking steps to improve it—strengthens your case considerably.

Consider Your Business Structure

If you’re a limited company and struggling, there may be other levers worth pulling. Dividends can be adjusted to reduce Corporation Tax bills in future years. If you’ve retained profits in the company to cope with cash flow difficulties, that’s legitimate tax planning. Equally, if your business is genuinely unviable, you might explore more formal insolvency routes, though this is a last resort and requires professional guidance.

For sole traders, the situation is trickier because HMRC can pursue personal assets. However, the same principles apply: a TTP arrangement protects you far better than ignoring the problem.

Don’t Let It Escalate

Ignored tax debts escalate quickly. After 12 months without contact, HMRC may pursue formal recovery through County Court or, for large amounts, the High Court. They can obtain County Court Judgements, which damage your credit rating and complicate future borrowing. In extreme cases, HMRC can pursue bankruptcy proceedings. These outcomes are avoidable if you act early.

Tax bills are stressful, but they’re manageable with the right approach. The difference between a controlled, manageable situation and a crisis often comes down to picking up the phone and having an honest conversation with HMRC whilst you still have time.

For tailored advice, contact Severn Accounting — we’re here to help.