Paying corporation tax is a necessary but unpleasant aspect of doing business. Few of us relish having to deal with the tax authorities at all – even if everything is in order, undergoing audits and filling out reports can be major drains on your company’s productivity and time.
However, you can take steps to hopefully dissuade the tax authorities from prying too much – they tend to keep an eye on entities that have experienced irregularities in the past, and so staying in their good books will allow you to focus more on keeping your business running uninterrupted in future.
Keep track of your incomings and outgoings
At the end of the tax year, you need to be able to present HMRC with a fairly detailed account of your expenditure and income for the year.
Rather than trying to pull all of this together at the last moment, make an effort to track expenses throughout the year. You might like to scan or photograph invoices and the like and save them, if you’re willing to go through them all as the new calendar year begins. Or you can enter amounts as you go along into a spreadsheet or even a mobile app.
Save for your tax bill
Make sure that you’re putting an appropriate amount of money aside so that you’re not caught out when it’s time to pay. Delays, extensions and partial payments aren’t unusual, but they will cause you to fall out of favour with HMRC.
Ask early for an extension
There are many perfectly understandable reasons for not being able to make your payment. Perhaps you had an unexpected expenditure, or lost a lot of business because of circumstances beyond your control.
If you’re fairly certain you won’t be able to pay the full amount before the deadline, HMRC’s Business Payment Support Service needs to know as soon as possible.
Some form of payment plan can be set up, but the earlier this is arranged the better, as missing the deadline without notice will mean you incur penalties and interest. And it may be some years before the tax authorities are willing to fully trust you again, rather than hound you.
Some of this advice will sound obvious, as it is just common sense ways to prepare for the end of the tax year, and ensuring that you pay what you owe on time. However, you can think of this post as a non-exhaustive checklist. With the deadline for online returns (31st January) approaching, the time to get everything in order is now!