The recession has brought many changes to the way HM Revenue and Customs (HMRC) deal with taxpayers. A generally more aggressive approach on the part of HMRC has coincided with the much-touted ‘time to pay’ agreements for businesses experiencing cash-flow problems. However, as has been recently reported, HMRC are taking a tougher line on such agreements and these are becoming more difficult to negotiate.
The problem for many people arises when HMRC demand that a credit card is used to settle the tax bill. Not only are HMRC entitled to interest (and, in appropriate circumstances, penalties) for late payment, but they also levy a further 1.25 per cent charge for credit card payments.
When you add to this the fact that credit card interest runs at rates typically between 15 per cent and nearly double that, it has to be said that use of a credit card to settle a tax bill can be an expensive solution to your cash-flow problem.
If you are experiencing difficulty in settling your tax liabilities on time, you need to weigh up carefully the pros and cons of how and when to pay.