Running a business comes with a lot of responsibilities, and paying taxes is one of the most important. Still, it can be very tempting to delay or avoid tax payments when cash flow is tight or paperwork flows overwhelming. With systems like MTD for self-assessment becoming part of how businesses report income, staying on top of taxes is more important than ever before. So what actually happens if you choose to skip paying taxes in the UK?
Penalties and interest will add up quickly.
The very first thing that happens if you don’t pay your business taxes in the UK on time is financial penalties. HMRC charges interest on late payments, which means your tax bill grows the longer it remains unpaid. In addition to interest, you may face late payment penalties, fines for failing to submit returns on time, and extra charges if delays continue. Even the smallest of unpaid amounts can become much bigger if you ignore them.
HMRC will contact you.
If you miss a payment or you fail to submit a tax return, HMRC won’t ignore it. You’ll usually receive letters, emails, or notices reminding you of what is owed. These messages might start politely, but it can become more serious if you don’t respond. Ignoring HMRC communication is very risky, but responding early and explaining a situation is always better than staying silent.
Payment plans may still be an option.
If you are struggling to pay because there is a genuine struggle behind it, HMRC may allow you to set up a time to pay arrangement. This allows you to spread the cost of your tax bill over a longer period, but it’s only usually available if you contact them before the situation escalates and you can show that you genuinely can’t pay in full. As long as you stick to the agreed repayment plan, you’ll be able to get some help.
Enforcement action could chase you.
If taxes remain unpaid and communication breaks down, HMRC can take enforcement action, which can include anything from declaring agencies, seizing business assets in serious cases, or even taking money directly from your bank account. These actions can disrupt your business operations and damage your reputation.
There may be legal consequences.
In extreme cases, especially where tax avoidance or deliberate non-payment is involved, you might end up with court proceedings, large fines, or even a disqualification from ever being a company director. While this doesn’t happen to everybody who falls behind, it is a real risk you take when tax obligations are repeatedly ignored.
It harms your business.
Skipping tax payments doesn’t just create short term stress, it can affect your ability to apply loans or funding to your business, build a trustworthy profile, or plan for any future growth. Unpaid taxes create uncertainty and can limit your opportunities down the line.
Paying taxes may not be the most exciting part of running a business, but staying on top of them protects you in the future and for your finances.
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