With almost one million people failing to submit their tax return on time this year, Self-Assessment tax arrears are extremely common amongst business owners whether they are self-employed sole traders or limited company directors. An immediate automatic £100 penalty is imposed on individuals who are late in filing their return, with additional fees and interest continuing to accrue until the account is brought up to date. With these charges being added onto the balance and interest compounding all the while, the debt can quickly build, escalating out of control.
In response to the challenges posed by COVID-19 the government has announced that upcoming Self-Assessment payments will be deferred until January 2021 in order to give business owners some much-needed breathing space. However, while this will go some way towards helping individuals manage their current and future tax liabilities, there are many who are already in debt to HMRC with income tax arrears who do not have the available cash flow needed to clear the money owed.