Company overview
This IT service and support company has been trading since the start of 2014, and now records an annual turnover of £110k. The director works on B2B IT solutions and software packages.
The challenge
Like many businesses, our client had faced problems with their cash flow. Unfortunately, this had steadily manifested itself into a debt of £163k owed to HMRC.
After the company’s initial pleas to HMRC of a payment plan were declined, the director was at a loss as to how to pay the debt. They then looked into the possibility of a company voluntary liquidation. This would see all the company’s assets sold off to pay its creditors as much as it could.
Unfortunately though, it was soon realised that a liquidation could result in a disqualification from acting as a director. This proved a stumbling block, as the owner depended on their director status to provide security clearance at some of the large businesses they worked as a consultant for.
How we helped
It soon became clear that liquidation wasn’t a viable option owing to the threat of disqualification. It was also apparent that the director was keen to keep the business running, and was prepared to look at any option that would mean the company could be saved.
The owner was even prepared to use personal funds if it would help, but had nowhere close to the full amount that the business owed.
Luckily, our advisers enjoy an excellent relationship with HMRC, and were able to negotiate a payment plan and agreement with the Enforcement and Insolvency Service. This meant that not only could the business survive, but also that the owner would be able to retain the director status needed for security clearances.
It took an unconventional Time to Pay agreement with HMRC to make it work, however. Usually, debts are divided into equal incremental payments, but HMRC were nervous that the sizeable debt would only be added to by allowing the company to continue.
The offer of laying down some of the client’s personal funds though, gave HMRC pause for thought. The director’s initial payment of £35k served to calm HMRC’s fears somewhat. Rather than making monthly repayments, fees were required by certain checkpoints instead to ensure that the business was still on course to repay its debt.
The result
Happily, the business has been able to continue to trade and doesn’t have the constant pressure from HMRC to deal with anymore. Payments have been manageable enough for the company to keep up with so far, and with continued prudence, they should be able to look forward to more successful times ahead.
Having trouble with HMRC debt?
We’ve helped countless businesses to arrange payment plans with HMRC that they otherwise may not have received.
Our advisers know exactly what HMRC looks for when calculating their risks and are able to negotiate affordable payment plans that keep businesses alive.
Speak to a specialist adviser now on 0800 975 0380, or email [email protected] for a free consultation with no obligation.
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