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Dealing with HMRC Tax Arrears

Dealing with HMRC Tax Arrears

Her Majesty’s Revenue and Customs (HMRC) is the biggest creditor for many UK companies, so effectively dealing with HMRC Tax Arrears is critical to your business.

If your business has fallen behind on its tax payments, HMRC will quickly alert you and take action to recover monies. That includes any outstanding VAT, Corporation, PAYE, or NIC taxes.

It is estimated that more than 250,000 companies in the UK have a payment plan in place with HMRC to clear up debts from late or unpaid taxes.

If you ignore a demand letter, your business could be issued with a winding-up petition.

HMRC issues around 60% of all UK winding-up petitions against non-paying businesses.

The Future Strategy team offers free and impartial advice to help you get past your tax problems.

We have a wealth of experience helping businesses deal with HMRC Tax Arrears, so act today and book a call with our team before the problem worsens.

What happens if your company has HMRC tax arrears?

If your business starts to experience cash flow problems, payments to HMRC can be pushed back to pay other creditors.

While this works in the short term, it can often leave your company with tax arrears.

HMRC does not need a County Court Judgement to send your business a payment notice, and there is no dispute process.

If you pay taxes behind schedule, it can act as a warning sign that your company could soon become insolvent – especially if you pay your taxes late on several occasions or have endured payment issues in the past.

If your business does have tax arrears, you’ll receive a warning letter from HMRC to alert you about the debt, often giving you just a week to respond and pay any outstanding debt.

Can I be held personally liable for HMRC tax arrears?

As well as potentially leading to the winding-up of your business, HMRC arrears may also lead to personal liability.

If you know that your firm is insolvent but continue to trade, you could be personally liable for its debts to HMRC.

What are your company’s options?

•  You can enter a Company Voluntary Arrangement (CVA) to protect your business from legal action pursued by HMRC, which then gives you time to work out an alternative payment plan.

• A’ Time to Pay’ plan is offered to viable and solvent companies. This provides a way to pay the debt owed to HMRC over a certain period. If your firm has a good compliance record, then this could be your best option.

•  You can enter into company administration (which means an external person/company runs it) to protect yourself from legal action from HMRC.

•  Use financing, invoice factoring, or other means to raise extra funds. This will allow you to pay your debts to HMRC and resume operating.

•  Close the business down via Administrative Dissolution or company Liquidation.

What is Time to Pay?

A Time To Pay (TTP) arrangement allows you to spread your business tax payments over a more extended period in a more affordable way.

It is a way of negotiating with HMRC to give your business more breathing space and allow cash flow to improve.

Future Strategy can help you work out a payment structure with HMRC. We can give you:

  • Advice on the best arrangements to work out with HMRC.
  • Avoid high tax bills which put pressure on your business and livelihood and take months to recover from.
  • The space to re-energise your business in the knowledge that you can safely meet your monthly payments.

We’re experienced in dealing with HMRC and can help you understand how to make the most of a TTP Arrangement to pay your debt and ease your worry.

Contact our team today, and we’ll explain the options available and how to proceed.

Is HMRC allowed to break a Time to Pay agreement?

By law, HMRC must keep to arrangements except under very strict criteria. However, HMRC has the right to withdraw if there are any changes in your business’s circumstances that wouldn’t support the Time To Pay plan.

Above all, you must be honest with HMRC. If they find out you have misled them in any way during the application process, they can also cancel the agreement.

If you default, then HMRC can break the agreement. If your situation gets worse, they will reassess the amount of risk.

Time to Pay is there to help temporarily distressed companies which are capable of future viability. If you are wound up by another creditor or are on the verge of being wound up, HMRC may cancel the agreement.

What if my Time to Pay arrangement fails?

If you cannot make payments on the due dates or you incur new arrears, then HMRC can immediately terminate the arrangement. They can also insist on all debt being paid in full immediately.

If you feel this may happen, discuss this with the Future Strategy team as soon as possible, as there may still be other options available to you.

How we can help you with your tax arrears

Our experts can help if your business is experiencing pressure from HMRC by attempting to maintain a time to pay agreement, 

We can provide real business solutions including:

•  Emergency finance – to cover your shortfalls in cash flow.

•  Restructuring – if the company only has short-term financial problems and is still viable.

•  Liquidation – if the company is unable to recover and needs to sell off its assets.

•  Restart a Limited Company – if the firm has failed but could still be successful if the debt wasn’t holding it back.

•  Company Closure – if you want to walk away and there aren’t enough assets to pay for a company liquidation.

If your company is having problems by attempting to maintain a Time to Pay agreement, or you are getting pressure from HMRC because you can’t afford to pay your PAYE, VAT, or corporation tax.

Contact the Future Strategy team today for free and confidential advice.

Our initial consultation is FREE. Here we will assess the viability of the business and offer advice on appropriate strategies. We will also advise on the solution options available concerning your specific situation and requirements. These solutions are wide-ranging, cost-effective, and flexible.

We can talk you through all of your options and find you the right solution

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