Charges will be levied from the moment your payment is late and interest will begin to accrue so it is vital you adhere to your payment deadline if you are in a position to do so. Continued late payment will see further action taking place through distraint , the issuing of a statutory demand , or even a winding up petition.
If you are either unable to pay your corporation tax bill or believe you will have no choice but to pay it late, communication with HMRC is key. The sooner you contact HMRC and make them aware of your situation the more options will be open to you and the less likely you are to face penalties or court action. As soon as you know you will be unable to make the payment, notify HMRC of this as much in advance of your corporation tax being due as possible; the very worst thing you can do is ignore the situation and delay taking action until the bill is overdue and you have fallen into arrears.
Once it gets to this stage, HMRC will be much less inclined to enter into negotiations with you, limiting your options significantly. If you need more time to get the money together to pay the amount in full, you may wish to enquire about the possibility of paying your corporation tax in instalments.
HMRC will consider requests from companies asking for additional time and may be able to help by setting up a payment plan known as a Time to Pay TTP arrangement. While any company can make such a request, the chances of this being accepted will depend on a number of factors including the amount owed, the likelihood of the company being able to adhere to the proposed monthly payments, and how the company has conducted its tax affairs previously.
The conditions of each TTP arrangement differ depending on the company and the figures involved; however, typically a company will be allowed to clear their corporation tax arrears over a period of months in an affordable manner. While a TTP plan can be a lifeline to many companies, only enter into one if you are confident in your ability to keep up with the monthly payments. Failure to do so will see the agreement terminated and HMRC will then be able to take steps to wind up your company.
Therefore be realistic about what you can afford when approaching HMRC; if you know you are unlikely to be able to clear your arrears within 12 months then consider discussing your situation with a licensed insolvency practitioner who will be able to offer advice on more formal procedures such as a Company Voluntary Arrangement CVA which may be more appropriate for your financial position. If the deadline for paying your corporation tax has already passed and HMRC are threatening to commence a winding up procedure or further court action, you need to act quickly to save your business.
You can prevent the WUP turning into a Winding Up Order by disputing the amount HMRC claim you owe in corporation tax, or else prove that you are able to afford to pay back the money you owe and arrange for payment to be made. If this is not possible, the other alternative to place your company into a formal insolvency procedure such as company administration or a CVA. An administration process would temporarily halt legal action while the corporation tax debt is dealt with, while a CVA gives the company an opportunity to restructure and reduce existing liabilities by entering into negotiations with its creditors.
Neither of these processes can be done without the help and guidance of a licensed insolvency practitioner who will not only be able to facilitate the procedure but also ascertain the best way for your company to deal with its current levels of distress. If you are struggling with corporation tax or any other debts and you feel the situation is beyond rescue, you may need to consider ways of closing the business through a formal insolvency procedure.
Perhaps you know your company will not be able to sustain the payments which are likely to be requested as part of a TTP arrangement, or the business has other considerable debts in addition to corporation tax arrears which you know the company is unlikely to be able to manage going forwards. While QuickBooks Team members like myself can direct how to find and operate the features for creating journal entries, such as outlined in the Create a journal entry in QuickBooks Online article, we cannot advise on which accounts to pick on those transactions.
It's important to us that you have precise information for handling these transactions, and as we're not trained in accounting, we won't advise on those kinds of choices. That's one of the reasons we keep working with an accountant in QuickBooks Online as simple as possible. The My Accountant tab offers you the option to invite an accountant you're already working with to your books as a user or you can use the Find a pro to help button to search our database of QuickBooks-certified accountants.
You may also get input from other users here on this thread or throughout the forum, but I always recommend checking with an accountant anyway to ensure that you have the best solution for your books. That way, you can have confidence when your submitting your remittances and reviewing your financials.
I hope this helps bring clarity to the options. Feel free to submit feedback about the features available in QuickBooks Online using the steps outlined here: How do I submit feedback?
The feedback is forwarded to our product development team to consider for future updates to the program. You can also keep an eye on our QuickBooks Online Product and Feature Updates page to learn about new additions to the software. I did not interpret this question as a "Tax" question that requires an accountant either. It is a data entry question for entering payment of business income tax. Users don't use an accountant for these other "Tax" entries and in no way should it be assumed by either side as "accounting advice".
My interpretation of the orginal question is as follows:. This is very important information and a compulsory bookkeeping task! I am shocked that Intuit does not have any reference to it or include it in their packages It is the culmination of all bookkeeping tasks in a fiscal year. I am hopeful that Intuit will take this under serious consideration!
Bookkeepers should not have to Google search this question at all!! These entries are usually given by the year-end accountants. They are not tax advice. However, accounting knowledge is required to make these entries. If you are making corporate tax installments for the current fiscal year, you will make the following entry:.
DR Corporate tax payable this is a liability account and will show as negative on the balance sheet after the payments are made. I will not write the entry for corporate tax expense as this entry should be given by the year-end accountant.
There are few things to consider here than just creating the entry. Enter a search word. Turn off suggestions. This means that the directors or other recipients of the drawings OWE that money to the company. They will generally be taxed upon it personally. HMRC will just as aggressively go after corporation tax owed than PAYE or VAT owed and they can use all the usual remedies such as distraint , statutory demands or winding up petitions.
It's very complicated from an accounting point of view. Where a company entering into a CVA has accumulated trading losses for tax purposes, the continued availability of such losses in future periods is likely to be a crucial aspect to the successful implementation of the arrangement.
Assuming the company continues to trade throughout the CVA process, its unrelieved trading losses may be carried forward for offset against future profits arising from the same trade. If you want to know more then please have a look through the CVA and tax losses guide. Worried about poor cashflow? Feel you have got into a bit of a mess?
For reassuring advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on Please note that the guide includes updates due to Covid For instance there have been some changes to insolvency legislation that limits creditors actions. A new 20 day moratorium for distressed businesses has also been introduced. We won't charge for any initial advice or face to face meetings. We speak in English. We will save you money and your precious time.
You can come to any of our offices. Berwick upon Tweed.
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