HMRC Tax Debt Help | VAT CT PAYE | Specialist Support

What happens if your business has HMRC debt?

When your company starts experiencing cash flow problem, payments to HMRC can often end up being pushed back in order to pay other creditors. While this can work in the short term, it often leaves your company with tax arrears.

HMRC is not required to have a County Court Judgement in order to send your company a payment notice. There is no dispute process – if HMRC notifies your company of a debt, you have a debt.

Paying taxes behind schedule can act as a warning sign for HMRC that your company could soon become insolvent – especially if your company pays taxes late several times or has had payment issues in the past.

If your business has tax arrears, it will receive a warning letter from HM Revenue & Customs alerting you about the company’s debt. Often, these warning letters provide just seven days to respond and pay the outstanding debt.

Can you be held liable for HMRC debt?

As well as potentially leading to the winding of your company, HMRC arrears may also lead to personal liability. If you know your company is insolvent but continue to trade, you could be found personally liable for your company’s debts to HMRC.

What options does your company have?

If your company does have a tax arrears problem there are a few options available to you.

HMRC offers a ‘Time To Pay’ plan to viable and solvent companies (see below). This is a way of paying the debt owed to HMRC over a certain time period. If your business has a good compliance record, this could be your best option
Enter a Company Voluntary Arrangement to protect your company from legal action pursued by HMRC and allow your business time to work out an alternative payment plan
Enter your company into Administration (your company is run by an external person/company) to protect yourself from legal action from HMRC
Raise funds via financing, invoice factoring or another means – in order to pay its debts to HMRC and resume operating
Close the company down via Administrative Dissolution or Liquidation

How we can help you with your HMRC tax arrears

If your business is experiencing pressure by attempting to maintain a time to pay agreement or you are getting more pressure from HMRC then we can help.

We can provide real business solutions to your situation including:

Time To Pay Negotiation our specialists will work with you and HMRC to come to an agreement
Emergency Finance to quickly cover short falls in cash flow
Liquidation if the business has become un-recoverable and needs to sell off assets
Restructuring if the business is still viable and just has short term financial problems
Company Restart if the business has failed but could be successful without the debt holding it back
Company Closure if you are wanting to walk away and there aren’t enough assets to pay for a liquidation

Get some FREE, confidential advice now. Call us on 0800 975 0380 now (free for mobiles and landlines) and ask to speak to Rick Smith, Ben Westoby or Emma Blyth.

HMRC Time To Pay arrangements can help support cash flow problems. As a business owner you’ll be aware of the need to manage your finances to meet HMRC’s demands, and if you fail to comply the penalties for missing payment deadlines could include being hit with charges or having assets seized to pay debts and costs.

HMRC can also start winding up proceedings if the situation isn’t addressed. In fact, failure to pay PAYE and NIC or VAT is the first signal to HMRC that your business is insolvent and can prompt recovery action against you for the debt they are due.

Please be aware that HMRC will not reduce the total amount of taxes due when a TTP arrangement is made, although each case is decided on its own merits, nobody is an exception.

Here are a few of the key principles and guidelines of Time To Pay:

Customers MUST make a reasonable proposal in terms of what they can afford over a specific time period
HMRC needs to be satisfied that you (the customer) will not have the ability to meet the tax due date
Time To Pay is to provide extra time for those companies experiencing financial problems, not for those wishing to use the money elsewhere (i.e. expansion or investments)
If the company’s financial circumstances change in any way, for the better or worse, you must notify HMRC immediately
The instalments are to be over the shortest time period reasonably possible
HMRC’s decision is ‘risk based’ so if there is a greater amount of risk, they may require further information before reaching a decision

Also keep in mind that the most important stipulation is that your company lacks the ability to pay its taxes on time. HMRC will not agree to a Time To Pay arrangement for any other reason.

Can HMRC break a TTP agreement?

According to law, HMRC must keep to the arrangements except under very strict criteria. If there are any changes in your company’s circumstances which wouldn’t be supportive of the Time To Pay plan, they do have the right to withdraw.

As mentioned above, honesty is imperative and if they discover that you have falsified or misled them in any way during the application process, they can cancel the agreement as well.

If you default they can break the agreement and of course, if your situation worsens they will reassess the amount of risk. Remember, Time to Pay is for temporarily distressed companies that have the capability of future viability.

If you should be wound up by another creditor or become on the verge of being wound up, they may very well cancel their agreement.

What happens if my Time To Pay Arrangement fails?

If you don’t make the payments on the due dates or incur new arrears, HMRC can immediately terminate the arrangement and insist on all debt being paid in full immediately. If this is likely to happen, it is important to discuss this with us as soon as possible as there may still be other options.