File anyway. The penalty for not filing is the bigger one.

They are two obligations rather than one. Filing means submitting the return by its deadline; paying means settling what that return shows. Missing either carries a consequence, and in both countries those consequences are charged separately from each other.

Because the failure-to-file charge is the heavier one, and it lands whether or not the money was ever there. Both authorities assess penalties for failing to file and for failing to pay as separate matters, so filing an accurate return you cannot yet settle converts the worse problem into the lesser one.

The British system works on the same principle, with a penalty once the filing date passes and interest on unpaid tax alongside it.

So filing an accurate return you cannot yet pay converts the worse problem into the lesser one.

It also unlocks the arrangements below, most of which require your returns to be up to date.

A payment plan, if your circumstances support one. GOV.UK's guidance for people who cannot pay a tax bill on time explains that you may be able to pay in instalments, and that HMRC will check whether a plan is affordable for you.

Where no plan can be agreed, HMRC asks for the full amount.

That affordability test is the heart of the process, so go into it with figures rather than hopes.

Our article on payments on account covers the instalment system that catches first-time filers.

Two main routes, depending on how long you need. A short-term plan settles the balance within 180 days or less, and the IRS says individuals can apply online while owing less than $100,000 in combined tax, penalties and interest.

A long-term instalment agreement spreads monthly payments, with online application available where you owe $50,000 or less combined and have filed all required returns.

Setup fees apply to the long-term route and not to the short-term one.

Our article on estimated tax while living abroad covers the payments that prevent this situation arising.

The one charging more to wait, once both returns are filed. Compare the interest rates and penalty structures rather than the size of the two bills, because a smaller debt accruing faster can easily cost more than a larger one on a cheaper rate.

A smaller debt accruing faster can cost more than a larger one on a cheaper rate.

Remember the credit interaction too. Paying UK tax late does not remove your entitlement to credit for it, though the credit follows tax paid rather than tax owed.

That timing point matters when the two returns rely on each other.

GOV.UK's Self Assessment deadlines set the British dates that drive this comparison, and the American ones follow their own calendar entirely.

No, and expecting otherwise is the commonest misunderstanding here. Interest keeps accruing on the outstanding balance under both systems while a plan runs. What a plan buys is order rather than relief: no escalation, and in America a reduced failure-to-pay rate while the agreement holds.

What a plan does is prevent escalation: no enforcement action, and in the American system a reduced failure-to-pay rate while the agreement holds.

So a plan buys order rather than relief. Where you can borrow more cheaply elsewhere, that is worth comparing.

Both authorities escalate on their own timetables, without coordinating with each other. HMRC moves towards collection and can involve debt collection agencies, while the IRS works through notices towards collection action that can include liens. Neither process is fast, and neither is quiet.

The IRS moves through notices towards collection action, which can include liens.

Neither escalation is fast, and neither is quiet. Both are far easier to prevent than to unwind.

GOV.UK sets out what follows if you do not contact them, and the tone of that guidance is worth reading before choosing silence.

Then challenge it and pay the part you accept in the meantime, because disputing an amount does not pause charges on the undisputed portion. In Britain an amendment or appeal is the route; in America an amended return or a response to the notice does equivalent work.

In Britain, an amendment or an appeal is the route, depending on where the figure came from. In America, an amended return or a response to the notice does the equivalent work.

Do not use a dispute as a reason to delay filing. The two are unrelated in the eyes of both authorities.

Sometimes, where there is a genuine reason behind the delay. Britain considers a reasonable excuse and America considers reasonable cause, and neither treats a simple shortage of funds as sufficient on its own. Serious illness, bereavement and events outside your control carry real weight.

Serious illness, bereavement and events outside your control are the kinds of facts that carry weight.

Raise it in writing, with dates and evidence, rather than by telephone.

Our article on reasonable cause penalty relief sets out what the American argument needs to contain.

It depends entirely on the arithmetic, so do the comparison rather than assuming. Set the rate charged on the tax debt against the rate on borrowing you could actually obtain. Where the tax charge is higher, borrowing is cheaper; where it is lower, a payment plan is the better instrument.

Where the tax charge is higher, borrowing is cheaper. Where it is lower, a payment plan may be the better instrument.

This is a financial decision rather than a tax one, so take it on the figures in front of you.

We can set out what each authority will charge; the borrowing side is yours to price.

Deal with each separately, because neither authority coordinates with the other and no combined arrangement exists. File both returns first, then approach each on its own terms, sequencing the conversations rather than holding them at once. The second is always faster than the first.

File both returns first, then approach each authority on its own terms.

Sequence the conversations rather than holding them at once. The information each wants is similar, so the second is faster than the first.

In our practice, clients who explained their position early to both were left alone to pay; those who waited were chased by both.

It happens more than you would think. A liability calculated in dollars and paid from a sterling account moves between the two, so the amount you set aside in January may not cover the bill in April.

Build a margin into any cross-currency provision rather than converting at the rate on the day you calculated.

Where the shortfall is purely a currency movement, pay the bulk immediately and treat the remainder as a short delay rather than a plan.

It can affect your credit position in ordinary commercial terms, and it affects future dealings with the same authority. Defaulting on an agreed plan makes the next negotiation considerably harder.

It also has a documentary benefit. An agreed plan is evidence that you engaged, which matters if you later ask for penalty relief.

Keep the agreement and the payment record together with your tax papers for that year.

Work through this in the week you realise, not the month after.

Then the problem is structural rather than temporary, and a payment plan alone will not fix it. Two consecutive years of shortfall usually means the tax is not being provided for as it accrues.

The remedy is a separate account and a standing transfer, set at a percentage of income rather than a fixed sum.

For self-employed people that percentage needs to cover both countries. Our note on estimated tax while living abroad explains the American side of the provisioning.

In our practice, clients who move to percentage-based provisioning stop having this conversation entirely.

The distinction matters to both authorities, and they are experienced at telling them apart. Engagement, accurate figures and kept promises mark out the first; silence and broken arrangements mark out the second.

Treatment diverges sharply after that point, and the second category attracts enforcement rather than negotiation.

So the most valuable thing you can do costs nothing: answer the letters, and keep whatever you agree.

Take an illustrative position. An American in Manchester owes £9,000 to HMRC in January and $7,000 to the IRS in April, having had an unexpectedly profitable freelance year.

She files both returns on time, pays £3,000 immediately, and agrees instalments with HMRC after an affordability discussion. She then applies for an American plan for the balance.

Interest continues on both, and no penalty escalates. The figures are illustrative; the sequence of filing first and arranging second is the part that matters.

First, not filing because the money is not there. That converts a payment problem into two problems.

Second, assuming a plan stops interest. Third, waiting for a letter before making contact.

Fourth, agreeing instalments you cannot sustain, because defaulting is worse than negotiating properly. Fifth, ignoring the smaller bill while dealing with the larger one.

We get the returns filed first, because that removes the larger penalty in both systems immediately. Then we work out what each authority will charge for time, so you know which debt to clear first.

Our treaty relief service covers the returns themselves, and we prepare the figures each authority will ask for before you contact them.

Tell us what is owed and when, and we will set out the order to deal with it.