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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My Husband is a Contractor ( self employed as a Limted Company

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My Husband is a Contractor ( self employed as a Limted Company ) . He is the only Director. He has been working like this since January 2014. Unfortunately, due to misunderstanding on our behalf, we have not saved nearly enough money to pay tax by the january 31st deadline. We have just filed for self assessment on HMRC website and await a UTR . Will HMRC allow us time to pay any outstanding taxes and if so, what is the best way to go about this? Ive read on other websites that they a difficult to negotiate with on this score? We want to pay, but need time. Are we best asking an Accountant to negotiate on our behalf? Many thanks. Jane.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

How much do you think your husband owes in personal tax as opposed to corporation tax which will be the company's tax liability?
Customer: replied 2 years ago.

I believe his Corporation Tax is not due till October 2015. As a guide, he will have earned over the last twelve months around £70,000 , with approx £7000 of expenses to be deducted ..ie. £63,000 . This is not taking into consideration the before tax threshold of £10,500. Therefore, i would estimate his personal taxable income would be approx £53,000? Hope that helps. Jane.

Expert:  TonyTax replied 2 years ago.
Thanks.

I think you are confusing corporation tax with personal tax.

What did you husband draw from the company in terms of salary and dividend between the date the company started in January 2014 and 5 April 2014? What income did he have between 6 April 2013 and the date he started working through the company?
Customer: replied 2 years ago.

From April 2013 to April 2014 he was self employed but under an umbrella company, who deducted his taxes etc each week. I would approximate his earnings to be around £50, 000 after expenses Since January 2014, when he became a limited company, I would say that he has deducted around £60,000. This is the amount he has drawn approx to live with ( normal household expenses ) and his business expenses . Thank you. Jane.

Expert:  TonyTax replied 2 years ago.

Thanks.

As far as his income from his own company is concerned, he should only disclose salary and dividend drawings for the period from when the company started to 5 April 2014.

Until you have a UTR, it will be difficult to make payments. Your husband could put his NI number on any cheques which means his money will be held in suspense and when a UTR is allocated, call the tax collector and have the money transferred. However, that can take time so you may be better off waiting until the UTR arrives.

When you get the UTR and have filed the return it will take a few days for the tax liability to show up in the self-assessment account. You can find information on ways to pay tax here. There is information on what you can do if you need time to settle a tax liability here. See sections 2 and and 3 and call the Business Payment Support Service who are the people you need to talk to about a payment plan.

When it comes to negotiating a payment plan, HMRC really prefer to deal with the taxpayer as opposed to a third party so I'd see how you get on yourself before paying an accountant or tax adviser. You may be asked to complete an income and expenditure questionnaire by the tax office. Even if you can't reach an agreement, start making payments anyway. Whilst they are more efficient at chasing taxes these days, it can take time for them to reach everybody and if you make inroads into the liability, things will look better for you.

I hope this helps but let me know if you have any further questions.

Customer: replied 2 years ago.

Thank you, ***** ***** is most appreciated. I just want to reiterate that he only discloses his income drawn from the company from January 2014 when he started it, to April 2014? Im just double checking that Ive understood you correctly, as I dont want hubby filling in his self assessment incorrectly then being accused of evasion! This all may seem very clear to your good self, but to someone who has always paid her taxes through an employer, ...it,s a minefield! lol. Thank you once again.

Expert:  TonyTax replied 2 years ago.
Assuming the company makes a profit, the corporation tax liability will be payable nine months and one day after the accounting period end date which. This is completely separate from your husband's personal tax liability. You should receive a corporation tax return sometime in February.

Your husband is only required to report his income for the year ended 5 April 2014 in his 2014 personal tax return. Any income drawn after 5 April 2014 and by 5 April 2015 will go into the next personal tax return.
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Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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