Bedford Accountants Reveal: Why It’s Important to File on Time (Even if You Can’t Pay Yet)

Every January and every year-end I speak to people across Bedford who tell me they are delaying their filing because they are worried about the payment. They think that submitting the return will trigger problems or that HMRC will expect immediate payment the same day. The truth is the opposite. Not filing causes far more issues than not paying.

You can file even if you cannot pay.
You can agree a payment plan after filing.
You can ask HMRC for Time to Pay once the return is submitted.
But you cannot stop penalties once the filing deadline has passed.

Let me explain in full.

Filing Late Is What Triggers Penalties, Not Paying Late

One of the biggest misunderstandings I see is the belief that filing and paying are the same thing. They are not. HMRC treats them as two completely separate responsibilities.

If you file late:

• You get an automatic £100 penalty
• Further penalties start adding at three months
• Daily penalties can apply
• You risk HMRC compliance checks
• Your tax record is marked as non compliant
• Lenders see you as higher risk

If you pay late:

• You are charged interest
• You may get a small penalty if payment is months overdue
• You can still agree a payment plan

The difference between late filing and late payment is enormous. Filing is what HMRC cares most about because they want your figures. Payment can be resolved afterwards.

Filing On Time Protects You From Growing Penalties

When you file on time you stop the penalty clock immediately. Even if you cannot afford the bill, filing shows HMRC that you are cooperating. From there, any interest that builds is small compared to the penalties you avoid.

Daily penalties can add up to £900.
Six-month penalties can add £300 or more.
Twelve-month penalties add another £300.

A lot of Bedford clients do not realise how quickly this adds up until they come to me with hundreds of pounds in unnecessary fines that could have been avoided simply by filing.

You Can Only Set Up a Payment Plan After You File

This is the part most people do not know.
HMRC will not discuss a payment plan until you have submitted your return.

If you do not file:

• HMRC cannot calculate the tax due
• You cannot apply for Time to Pay
• You cannot spread the debt
• HMRC may assume you are refusing to cooperate

I tell new clients this every year. Filing unlocks all the flexible options. It is impossible to arrange any agreement if HMRC does not know the amount you owe.

Your Accountant Can Help You File Even If You Are Not Ready to Pay

Many people avoid speaking to their accountant because they feel embarrassed that they cannot pay. There is no need. We deal with this situation all the time. Tax bills are often higher than expected, especially for new businesses or directors who were never guided properly.

When you file on time, your accountant can help you:

• Estimate the bill
• Prepare the paperwork
• Submit the return
• Contact HMRC on your behalf
• Apply for a payment plan
• Reduce future tax bills with proper planning

The longer you wait, the fewer options you have.

Filing On Time Avoids HMRC Compliance Checks

HMRC has automated systems that flag late filers. A late return increases the chance of:

• Enquiries
• Requests for bank statements
• Questions about income
• Reviews of previous years

These do not always happen but the risk rises every day the return is overdue.

By filing on time, you avoid drawing unnecessary attention from HMRC.

Late Filing Affects Mortgages and Lending

This is one area Bedford business owners almost never think about. Lenders require:

• Up to date SA302s
• Up to date tax year overviews
• Evidence that your tax affairs are in order

If your return is late:

• You cannot get the documents needed
• Mortgage applications get delayed
• Remortgages can fall through
• Lenders become less confident
• Your borrowing capacity drops

I have personally seen clients lose property deals simply because their returns were not filed on time. This is one of the biggest unspoken consequences of late filing.

Filing On Time Gives You Clarity for the Year Ahead

When you file your return, you immediately know:

• What you owe
• When you owe it
• What you need to budget
• Where the surprises are
• Whether future changes are needed
• Whether you have underpaid or overpaid
• How to plan next year better

You cannot plan anything without clear figures. Filing gives you the truth, even if the truth feels uncomfortable at first.

Once you know the number, you can make a plan. When clients do not file because they are scared of the bill, the worry grows far bigger than the reality.

You Do Not Have to Pay the Bill Immediately

Many people think that filing triggers instant payment. It does not. HMRC gives you time. Filing your return early can actually give you months to prepare before the payment deadline arrives.

Even if the deadline has passed, you can:

• Set up a payment plan online
• Call HMRC to arrange Time to Pay
• Spread the cost over several months
• Avoid penalties as long as the return was filed

Payment plans are far more flexible than people realise.

HMRC Is Surprisingly Reasonable When You Communicate

I have to be fair here. HMRC gets a bad reputation, but as long as you communicate and file your return, they are usually reasonable. If you submit your return and contact them before things escalate, HMRC will often:

• Agree manageable monthly payments
• Stop further penalties
• Avoid enforcement action
• Provide time to get your finances in order

Problems usually begin when people ignore the letters, ignore the deadlines and avoid filing.

Filing shows you are cooperating, which goes a long way.

Filing On Time Helps Your Accountant Protect You

Once your accountant has the figures, they can:

• Review your tax position
• Check for missed expenses
• Identify allowable claims
• Reduce next year’s bill
• Fix previous errors
• Plan your income better
• Adjust your salary or dividends
• Improve your bookkeeping
• Prepare you for VAT or MTD changes

Without filing, your accountant is working in the dark.

Filing early gives them the time to optimise everything rather than rushing to correct mistakes in January.

The Emotional Impact of Filing Late

I want to acknowledge something that clients often tell me behind closed doors. Late filing causes anxiety. It sits on your mind. It creates unnecessary stress. People lose sleep, avoid looking at their accounts, ignore HMRC letters and feel overwhelmed.

Filing, even if you cannot pay, removes that weight almost instantly. I see it happen every year.
A client files, they get the number, we discuss a plan and suddenly they feel in control again.

Delay magnifies fear. Filing reduces it.

What You Should Do Right Now If You Think You Will Miss Payment

If you know you cannot pay your tax bill, here is what you should do immediately:

• File the return
• Ask for a tax calculation
• Speak to your accountant
• Contact HMRC if necessary
• Discuss a payment plan
• Adjust your tax planning for next year

Do not wait. Waiting has no benefit. Filing has every benefit.

How Towerstone Supports Bedford Clients Who Cannot Pay Yet

At Towerstone we help clients file on time even when they are worried about payment. We do not offer weekend or in person evening appointments, but we do speak with clients during early evenings when needed because tax problems feel urgent.

We:

• Prepare and file returns quickly
• Contact HMRC on your behalf
• Apply for Time to Pay
• Reduce tax through proper planning
• Fix bookkeeping
• Review your income structure
• Explain everything simply

Clients often tell us the relief they feel once we take over the process.

The Bottom Line for Bedford Taxpayers

File on time even if you cannot pay yet.
It protects you from penalties, prevents HMRC attention, keeps your lending options open, gives you clarity and allows you to set up a manageable payment plan. Filing late causes unnecessary stress and unnecessary cost. Filing early gives you control.

A tax bill can be managed over time. A late filing penalty cannot