Help, as a BV entrepreneur I cannot pay my payroll taxes right now

I received the following message from a client in early July during the quarterly review:

Alarming message from client

“These are still tough months. But after having a non-performing sales person for 1 year, fortunately the salary of sick employee X will expire soon, and around October the salary of Y. Right now things are tough and I cannot pay the payroll tax return on time. I have bought out the Audi lease. That also saves on costs. We are slowly getting there; next year there must be a profit again, otherwise I fear the worst.”

Difficult period

It is of course possible that your company has to go through a difficult period for a while. This can have various causes, but it is then very important to take the right steps towards the Tax Authorities. One of the matters that is very important is that you do not make wrong decisions that could result in you, as a DGA, being held personally liable for the debts of your BV. This generally applies if you do not act as a good and competent director. In the case of tax debts, you must therefore report an inability to pay in a timely manner.

In addition, it can also be examined whether you might be able to obtain a short-term telephone extension for a tax assessment. In this case, it concerned the payroll tax return for May (including the extra holiday allowance) for a total amount of nearly €22,000. So, a truly substantial amount.

Notification of inability to pay handled

Following the message from this client, we immediately set up a video call. During this call, we not only discussed the financial situation thoroughly but also immediately discussed the form “Notification of inability to pay taxes”.

It is important that for a tax return such as payroll taxes, you send the form within two weeks after the payroll taxes should have been paid. Fortunately, the client was on time, and we sent this well within this period. Please note: if you do not do this in a timely manner, the notification is not legally valid and the Tax Authorities can then hold you liable for the non-payment of the outstanding tax debt, resulting in personal liability. We have thus prevented this for this tax debt.

Short-term telephone extension requested and granted!

Should you ever call the tax information line yourself regarding an assessment you cannot pay, be prepared for the fact that the Tax Authorities have two paths for this. The first standard path is via a “request for a payment arrangement and extension of payment for taxes and/or premiums for companies”.

When you have the Tax Authorities on the phone, this sounds like a good possibility. But make no mistake. In practice, this is of little use to you since you not only have to provide a lot of data, but also certain securities that you actually cannot provide. You can get a first impression of this by looking at the form at this link.

This path is therefore often not feasible in practice. But fortunately, there is also a short-term telephone extension. This is the second path and it is a lot more practical. This is an extension for 4 months and it applies if you roughly meet the following conditions:

• The outstanding tax debt is less than €20,000.
• You have not previously received an extension of payments due to payment problems (or this has already been resolved).
• You have always been up to date with your tax payments in the past and, in any case, you must not have received any writs of execution yet.

As the name suggests, you can apply for this by telephone. We also did this for this client after he had first brought the assessment below €20,000 at our request. After all, you can already pay a portion of the assessment so that it falls below the required limit. We were granted this extension, and additional good news is that upon granting this extension, the fine (in this case €655) is also immediately waived. So this is certainly a bonus in these difficult financial times.

The client therefore received an extension until early December and a reduction of the fine of €655. This hopefully gives him the time and financial space to get his finances in order.

Conclusion

Always report an inability to pay taxes in a timely manner to prevent being held personally liable. In addition, try to actually obtain an extension via a short-term telephone extension and, finally, pay close attention to which assessments you request this for. After all, it is better to do this for a relatively large assessment, so that it indeed gives you the right financial breathing room. An important condition is that you have always been up to date with your tax payments. If this has not been the case, you simply will not receive the short-term telephone extension.

And fortunately, things are going better with this client now. There is now a motivated (smaller) team, a few important assignments have come in, and the positive energy is completely back.

Response

Thank you for reading and I would greatly appreciate it if you also leave your comments and questions below the blog. Then other readers will also benefit from this! In addition, you can always contact us if you want to go into this more deeply!