If the council have tried to use bailiffs, and you have still not paid your business rates in full, they may apply to the magistrates’ court for an order for you to be sent to prison (‘committal’).If you have not paid because you don’t have enough money, the court is not likely to send you to prison. The court would have to show either:

• you have deliberately refused to pay (known as ‘wilful refusal’); or

• you could afford to pay but did not (known as ‘culpable neglect’).

You must go to the hearing and show the court your business and household budget to explain why you have not been able to pay.Take along any evidence to show you have tried to pay what you could afford.

If you are on a low income, you may be able to claim Working Tax Credit on top of your wages. Many self-employed people do not realise they can claim tax credits.You can qualify in the following ways.

• If you (or your partner) are employed or self-employed for more than 16 hours a week and are bringing up one child or more. If you qualify for this reason, the tax credit can also help with childcare costs in certain circumstances.

• If you (or your partner) are employed or self-employed for more than 16 hours a week and have a disability that puts you at a disadvantage in getting a job.

• If you or your partner started work (including self-employed work) in the last three months and are:

– over 25 and work for 30 hours or more a week; or

– over 50 and work for 16 hours or more.

In both cases, you must have received Income Support, Jobseeker’s Allowance or Incapacity Benefit within the last six months.

Working Tax Credit will usually be paid into your bank account, and is dealt with by HM Revenue & Customs.

If someone owes you money and they are not paying you, you should speak to them to try to work out a solution.

This may include:

• arranging for them to pay you in instalments; or

• coming to an agreement if they are not paying the debt because they have a dispute with you about the invoice or the goods or services they have bought. If the person is only disputing part of an invoice, you should ask them to pay the part they are not disputing immediately and then sort out the rest separately. Be careful not to harass the person who owes you.

If a business owes you money, you may have the right to claim statutory interest (interest at a set rate) from them. If you cannot recover the debt by speaking to the person or company direct, you may be able to take court action (either by yourself or through a solicitor) or use a debt-collection agency to get the money back. You will need to balance the costs of taking any formal action against how much you would get back, particularly if the company has a reason for not paying or cannot afford to pay. Make sure you have a good

credit-control system (a system for managing money owed to your business) as this can considerably  reduce the problems of late payment and bad debts.

If your business does not have yearly sales that add up to the registration level shown on the tax sheet, you do not need to be registered for VAT. If you are already registered for VAT and you want to be demoted from the register, you will need to show that your turnover will be less than the de-registration level (shown on the tax sheet) over the next 12 months. You could use your budget sheet to show this.

You must pay VAT on all of your sales, unless the sales do not qualify for VAT (known as ‘zero rated’) or are exempt. The tax paid on goods and services you have bought (shown on the invoices) is your input tax and the tax on your sales is your output tax. If you have bought more than you have sold, or your sales are zero-rated, your input tax will be more than your output tax and you will get the difference paid back as a refund.

You have to send VAT returns every three months (every quarter).The date on invoices you send or receive is known as the ‘tax point’, and this usually helps you to decide which return you should include them in. However, you may apply to your local VAT office to account only for the tax you have  actually received. This is called ‘cash accounting’. You can also get back the tax you have paid on debts a person or company is failing to pay you, instead of waiting for the person or company to go bankrupt or go into liquidation (this is when a company stops trading and its assets are sold and split up equally between its creditors