Dealing with Unpaid Crypto Taxes: Your Options When You’re Unable to Pay on Time

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Categories Taxation Posted on July 18, 2023July 18, 2023

As the effects of inflation, rising living costs, and crypto market fluctuations persist, our clients have raised concerns about the potential tax risks associated with deferring their tax payments. Understanding the implications and available options for managing taxation liabilities during these challenging times is crucial.

In our comprehensive guide on time to pay arrangements, we shed light on the benefits of negotiating a payment plan with HMRC, providing a temporary reprieve to those facing financial constraints. However, it’s vital to note that failing to meet the obligations of such arrangements can lead to significant repercussions for both individuals and businesses. Gain valuable insights and practical advice in our time to pay arrangement guide.

Time to pay arrangement

A time to pay arrangement offers a valuable opportunity to individuals and businesses, allowing them to spread their tax payments over an extended period compared to the standard deadlines. Typically utilized for outstanding Personal tax, VAT, PAYE, and corporation tax, this arrangement can provide much-needed flexibility during financial challenges.

Approaching HMRC ahead of payment due dates can often help avoid late payment penalties, although late payment interest may still apply. If a more formalized time to pay arrangement is deemed necessary, it can be directly arranged with HMRC. To initiate this process, it’s essential to have the tax reference numbers ready for each tax under discussion.

However, it’s worth noting that how the application is presented to HMRC can significantly impact the outcome. HMRC will seek assurance regarding the timely settlement of taxes and ensure that the tax payer has no intention of evading its tax obligations. Demonstrating a positive payment history can also play a crucial role in influencing the decision.

In summary, understanding the intricacies of time to pay arrangements and presenting your case effectively to HMRC can yield favourable results, enabling you to fulfill your tax responsibilities while mitigating financial strain.

If the agreed payments are not made in full and on time, then HMRC can cancel the time to pay arrangement and seek immediate payment of the total outstanding debt.  In addition, penalties can be charged. Seeking professional advice throughout the time to pay arrangement process is therefore recommended.

For any further help and assistance for you  please contact us.

Set up time to pay arrangement online

You can set up a Self Assessment payment plan online if you:

  • have filed your latest tax return
  • owe £30,000 or less
  • are within 60 days of the payment deadline
  • do not have any other payment plans or debts with HMRC

If you cannot set up a payment plan online

If taxpayers owe more than £30,000, or need longer to pay, they should phone the self assessment payment helpline on 0300 200 3822 to make an arrangement.

They will ask you:

  • if you can pay in full
  • how much you can repay each month
  • if there are other taxes you need to pay
  • how much money you earn
  • how much you usually spend each month
  • what savings or investments you have

If you have savings or assets, HMRC will expect you to use these to reduce your debt as much as possible.

To avoid a 5% late payment penalty, We advise our clients to set up the arrangement within 30 days of the due date (generally by 1 March 2022), although the service is available for 60 days following the due date.

Handling Unpaid Taxes on Crypto: What to Do If You Can’t Pay on Time

We are seeing an increasing number of queries from our clients who would like to understand what the tax risks and consequences may be if they deferred tax payments and what options may be available to them manage their taxation liabilities in the current economic climate of increasing inflation , costs of living and lower crypto assets price during the crypto winter season.

It’s important to address concerns about unpaid taxes. Knowing your options and understanding how to manage your tax obligations during difficult times is crucial.

Our guide on time to pay arrangements provides valuable insights into negotiating a payment plan with HMRC, which can offer temporary relief for those facing financial constraints. However, it’s essential to note that failing to meet the requirements of such arrangements can have serious consequences for individuals and businesses. Find practical advice and gain valuable insights in our guide on time to pay arrangements.

What is a time to pay arrangement

A time to pay arrangement allows individuals and businesses to spread out their tax payments over a longer period compared to regular deadlines. It is commonly used for unpaid personal tax, VAT, PAYE, and corporation tax, offering flexibility during financial difficulties.

Contacting HMRC before the payment due date can often help avoid penalties for late payment, although late payment interest may still apply. If a more formal time to pay arrangement is necessary, it can be directly arranged with HMRC. To begin this process, make sure you have the tax reference numbers for each tax you want to discuss.

It’s important to note that how you present your application to HMRC can significantly affect the outcome. HMRC will want assurance that taxes will be paid on time and that you’re not trying to avoid your tax responsibilities. Demonstrating a positive payment history can also influence their decision.

In summary, understanding the details of time to pay arrangements and effectively presenting your case to HMRC can lead to positive results, enabling you to fulfil your tax obligations while managing financial difficulties. Seeking professional advice throughout the process is recommended.

If the agreed payments are not made in full and on time, HMRC can cancel the time to pay arrangement and demand immediate payment of the total outstanding debt. Additionally, penalties may be charged. It’s important to consider seeking professional assistance throughout the time to pay arrangement process.

Setting up a time to pay arrangement online

You can set up a Self Assessment payment plan online if you:

Have filed your latest tax return

Owe £30,000 or less

Are within 60 days of the payment deadline

Do not have any other payment plans or debts with HMRC

If you can’t set up a payment plan online

If you owe more than £30,000 or need more time to pay, contact the self-assessment payment helpline at 0300 200 3822 to make arrangements. They will ask about your ability to pay in full, your monthly repayment capacity, other taxes you need to pay, your income, monthly expenses, and savings or investments. HMRC may expect you to use your savings or assets to reduce your debt as much as possible.