At the end of 2008, Alistair Darling announced a fast track service to allow companies to apply to defer their corporation tax bills. In order to qualify for the deferment scheme, the business must agree their requirement with HM Revenue and Customs (HMRC). If agreed, the period of deferment is normally 3 months. However, this may be extended depending on the company’s individual situation.

So far, it seems that a significant number of businesses have taken advantage of the scheme. According to the government’s own figures, HMRC have made agreements with one hundred and forty six thousand companies to delay the payment of their tax. This number is the equivalent of GBP2.6 billion in uncollected tax revenues.

On the face of it, the corporation tax deferment scheme sounds an extremely good idea. However, I believe it is important to question whether this policy is simply deferring an inevitable wave of company insolvencies. There is a strong argument to suggest that it is simply hiding a deeper problem and that when the tax becomes due many business will be unable to pay their debts.

The reason for the scheme was to create breathing space for companies to restructure their business in these challenging times. In other words, cost cutting exercises should be undertaken so that these businesses can trade on through the difficult economic conditions ahead. However, in many cases I do not believe that this is happening. The reality is that companies are gambling on an upturn in trade so that they will have the cash to pay the tax when it eventually becomes due.

However, we have to question whether this view is realistic. The bank of England recently agreed that an additional GBP50 billion was required to be pumped into the economy through quantitative easing. At the moment the banks show little sign of lending this money out to either business or consumers which is so desperately needed to encourage growth back to the UK.

Despite recent positive news on the return to growth of the economies of France and Germany, no one really knows when the recession in the UK and wider Europe will truly be over. Even after a return to growth, the experience of the last recession in the late 1980s / early 1990s tells us that companies will continue to struggle and many may continue to fail. This is because the businesses that are left will be leaner and meaner. Competition will be fierce, prices will remain depressed and payment terms extended. Companies which do not have the cash to ride this storm will still fail even where official figures are suggesting a return to the good times is just round the corner.

Given this situation, I would argue that the agreements currently being made by companies with HMRC to defer tax payments are unrealistic, too short termist and will need to be renegotiated. The problem is that the tax liability has not gone away. As the economy continues to struggle and company cash flow remains tight, it will come back to haunt many businesses in 6 months or so. This may lead to a surge in company failures towards the end of 2009 and into the first quarter 2010.

One of the best parts about being a real estate agent is that you have the power to be your own boss. You may align yourself with a specific over-arching company, but in the end you call the shots. You determine the hours you work - you can do paper work at 5 at night, 5 in the morning or over lunch. You determine how hard you work and, as a result, how much you make. And quite often, you can determine where you work. This means you can work in your home, and when you set up a business in your home, you have the added perks of tax write offs. But those write offs only benefit you if you know what you’re doing.

First, know how to set up your business so that it is legitimately tax deductible. Your office space should be just that: office space. You cannot use that area for anything other than business. It shouldn’t double as your TV room, your kids’ playroom after school, your kitchen or your bedroom. This needs to be your place of business, not leisure. If the majority of your work is off-site, at a home on the market you are showing for instance, but you do your paperwork and handle all other meetings in-house, you can still write off the space. When you do write it off, be sure to do so properly. If your office is half of your apartment, deduct half of your rent. If your office is one-tenth of your house, deduct ten percent of your mortgage.

Within that space there are also numerous deductibles. Your phone bill, for example, can be written off, provided the calls you make on it are for business. It is easiest, then, to have a separate line for your office instead of using the same land line you do for the house (this will also minimize the number of calls and messages not received because of family miscommunication). All of your office furniture and supplies can also be written off. The desk and chair, the lamp, the pens, the files and the filing cabinet are all potential write offs. Hang on to your receipts when you purchase them to make deducting the cost as easy and accurate as possible.

Stepping outside of the office provides additional opportunities for write offs. Every time you get in your car and drive to a home, condo, commercial real estate lot or any other work-related destination, you are covering miles that can be written off. Keep track of the odometer. The miles to and from your home to a homeowners or a seller’s will add up quickly: Texas is a big state; Austin is a big city. You’ll be surprised how much you can deduct come tax day.

Finally, be honest. It may be tempting to write off everything you can imagine as a business expense, but your mother’s visit for lunch isn’t a business meeting. You may get away with claiming it was once or even a handful of times, but eventually, the IRS will catch wind, and every deduction you’ve made will come into question. Take advantage of the deductions available to you as a real estate agent running your own business in your home. Do not take advantage of the government.

While most reasons for not filing taxes are acceptable, the fact is, even late or back taxes eventually need to be filed. No matter how late, filing your back taxes will help to either lessen or altogether prevent any IRS problems. The IRS still requires that you file your taxes, whether you only missed a particular year or have not done so since mid 1980s. This will absolutely lessen your risk of being prosecuted by the IRS and having enforced tax collection procedures thrust upon you.

While it would be nice to have all tax records readily available, this is not possible for many people. Phenomena like fires, floods and other calamities may destroy all of a person’s belongings, including relevant documents. On the bright side, a great tax attorney and accountant are instrumental in successfully filing your back taxes as they can assist in the reconstruction and retracing of tax records. In some extreme cases, tax lawyers have been known to prepare and recreate relatively accurate and complete tax records dating as far back as 15 to 20 years earlier.

Some people would have wanted to dutifully pay for their taxes had it not been for certain circumstances, like not having enough money to pay the amount due on their returns. Fortunately, they are provided with the choice of filing a missing return or back taxes. Its key benefits include not being imposed with the substantial penalty of 25%, the fee for late filing. Certain states can in fact penalize you with larger fees even if you do not owe them any money, if you fail to complete this legal obligation.

You will definitely conserve a great deal of time if you were able to keep all your tax information from previous years. What you just need to do now is prepare your tax returns. This is the stage when you need professional help the most. The thought of not knowing whether or not you owe back taxes or knowing that you have not paid for them is distressing. Clients have observed that just making an appointment to see a tax professional who can help them sort through the maze of forms and procedures makes their worries go away.

Most people go on believing that electronic methods can be utilized in filing for back taxes. The IRS, on the other hand, does not allow these, as they prefer to receive these requests through hand delivery or mail. Also, using certified mail is required to have proof of IRS receipt on these documents.

Those who know they owe the IRS some amount of money will most likely be obliged to pay interest and other applicable penalties. In this case, types of IRS assistance, like payments plans, are available.

In reality, filing back taxes can be a relatively quick and easy process. What complicates the situation is your refusal to instantaneously deal with the issue and inaction in filing and paying back taxes. At worst, you might, in the end, owe significant amounts of money and face more severe consequences because of these IRS issues.