Lucía Ferrer runs a small building refurbishment company in Castellón, with four employees and rented premises. In October four returns fall due at once: VAT for the third quarter (11,200 €), the tax withheld from payroll and professionals on Modelo 111 (2,900 €), the tax withheld on the rent of the premises on Modelo 115 (640 €) and the second corporate income tax payment on account on Modelo 202 (4,100 €). In total, 18,840 €. A large customer has owed her a stage payment for works since July, and there is half that amount in the bank. Her idea is to file everything on the 20th and ask to pay the whole lot in twelve monthly instalments.
If she does it that way, almost everything will go wrong for her. Of those four returns, three cannot be deferred by law and the fourth only in part.
The list that shuts the door
Article 65.2 of the Ley General Tributaria (the General Tax Law) lists the debts that "may not be deferred or paid in instalments". It is not a list of difficult cases but of absolute exclusions: the authorities do not weigh them up, they reject them as inadmissible. For an ordinary company or self-employed person, three of them matter.
Withholdings and payments on account, letter b). Everything paid in as a withholder: Modelo 111 for payroll and professionals, Modelo 115 for rents, Modelo 123 for investment income. The reason is simple: that money was deducted from someone else and the company is merely holding it. Deferring it would mean financing yourself with a third party's tax.
Taxes passed on to customers, letter f). VAT is the typical example. It cannot be deferred either, with one exception the law leaves open and which we deal with below: the part of the VAT charged on an invoice the customer has not yet paid.
Corporate income tax payments on account, letter g). Modelos 202 and 222. The literal wording refers to the obligations "to be met by a person obliged to make payments on account of Corporate Income Tax", and the usual reading confines it to those payments on account. The annual return on Modelo 200 falls outside that letter, although it is worth checking on the Agency's website itself before relying on it.
The other four letters are less common for a small business: debts paid with revenue stamps, claims against the estate in insolvency proceedings, recovery of State aid, and debts arising from a judgment or a dismissal decision when their collection had been suspended during the litigation. The guide on debts that cannot be deferred goes through each one with its explanation.
Lucía's figures, return by return
Let us see what she can really ask for. The customer's unpaid stage payment is 18,000 € plus 3,780 € of VAT, and that VAT is included in the 11,200 € on Modelo 303.
| Return | Amount | Can it be deferred? | Reason |
|---|---|---|---|
| 303 (VAT) | 11,200 € | Only 3,780 € | Letter f): the part charged and not collected is allowed, if proved |
| 111 (withholdings) | 2,900 € | No | Letter b) |
| 115 (withholdings on rent) | 640 € | No | Letter b) |
| 202 (corporate tax payment on account) | 4,100 € | No | Letter g) |
| Total | 18,840 € | 3,780 € |
The result is that Lucía has to pay in about 15,060 € on the 20th and can only apply to defer 3,780 €. If her cash does not stretch that far, the conversation is no longer about instalments but about which surcharge each day of delay is going to cost her.
The exception for uncollected VAT
Letter f) allows the tax passed on to be deferred when "it is duly proved that the amounts charged have not actually been paid". The burden of proof lies with the person applying. In practice, you provide:
- The invoice issued, with the VAT shown separately.
- The bank statement showing that the payment has not come in.
- If there is one, the claim sent to the customer or the document proving non-payment.
It is not enough to say that a customer generally pays late. Specific invoices have to be identified, and the amount that can be deferred cannot exceed the VAT on those invoices. If the customer pays during the deferral, the prudent thing is to bring forward payment of that part, because the argument behind the application has disappeared.
If the customer is never going to pay, the route is not deferral but amending the taxable amount for non-payment, which has its own requirements and time limits. We explain it in a customer is not paying me: can I recover the VAT?
What happens if you ask anyway
This is the real danger. The last paragraph of article 65.2 says that these applications "shall be declared inadmissible", and article 47.3 of the Reglamento General de Recaudación (the General Collection Regulations) adds that inadmissibility means the application "is deemed not to have been filed for all purposes".
That means the application protects you from nothing. An application admitted within the voluntary period prevents the enforcement period from starting; an inadmissible one does not. The day after the due date the debt enters the enforcement period, and it does so even if the taxpayer has a filing receipt with its registration number on the Agency's website.
Filing the application generates an acknowledgement of receipt, but the inadmissibility decision arrives later, sometimes weeks later. During that time the surcharge has already arisen. If your application includes a debt covered by article 65.2, assume that part has been in the enforcement period since the day after the due date.
For Lucía, had she put the 18,840 € into a single application, the rejection of the 15,060 € that cannot be deferred would mean at least the 5 % enforcement surcharge: 753 €. And if the providencia de apremio, the enforcement order, arrived before she paid, 10 % or 20 %, depending on the case, with interest.
The inadmissibility decision can be challenged by an appeal for reconsideration or a claim before the economic-administrative tribunals, under article 47.4. But an appeal makes sense when the Agency has made a mistake, for example if it has rejected uncollected VAT that was in fact proved. It does not make deferrable what the law excludes.
How to organise cash when some debts cannot be deferred
When debts of both kinds exist side by side, the order of payment is decided by the cost of each one, not by its size.
- First, what cannot be deferred. Withholdings, VAT collected and payments on account. Every euro left unpaid enters the enforcement period the day after the due date.
- Next, the application for what can be deferred. In Lucía's case, the 3,780 € of uncollected VAT, with its supporting evidence, within the voluntary period.
- If there is still money missing, whatever cannot be paid of the non-deferrable debts is best paid as soon as possible and before the enforcement order is notified, so as to stay at 5 %. The guide on deferring within the voluntary period explains how the surcharges change as the days go by.
If a company has trouble meeting its withholdings on a recurring basis, the symptom is a different one: the business is using other people's tax money as working capital. That is not fixed with a payment schedule, and it is worth looking at before the debt grows. You can send us the outstanding returns and the state of your collections through the deferral form and we will tell you which part can be applied for and which cannot. We cannot guarantee that what can be deferred will be granted, but we can keep you from filing an application that does not protect you.
Individuals
A self-employed person without employees or rented premises rarely has withholdings of their own to pay in, so the exclusion that affects them most is the VAT on Modelo 303. Their IRPF (personal income tax), on the other hand, including the payments on account on Modelo 130, does not appear on the list in article 65.2: letter g) refers only to Corporate Income Tax. That is why a self-employed person can defer their annual income tax or their Modelo 130 in circumstances where a company could not defer its Modelo 202 payments.
If you let a tourist home and have to withhold tax from a supplier or from the owner of premises, that withholding falls under letter b) even if you are an individual. The rules on Modelos 111 and 115 explain when that obligation arises.
To find out how much can be deferred without a guarantee once the non-deferrable debts are set aside, see how much can be deferred without a guarantee. And if the application has already been filed and the answer was no, what to do after a refusal.
Separating what can be deferred from what cannot is the first check we make at Salama Tax for any business debt, even before we talk about timescales.