Updated: 15th March 2021
With so many companies in the UK struggling to stay afloat during the coronavirus crisis, the government has introduced a series of measures designed to prevent a steep decline into insolvency.
As many businesses are experiencing extreme cash flow difficulties and finding it difficult to pay creditors across the board, tax arrears can be particularly worrying. HMRC has offered additional support to businesses during the coronavirus pandemic, however, by extending their Time to Pay scheme, so how might this help?
HMRC has broadened access to their Time to Pay scheme to support more businesses affected by the coronavirus pandemic. You may be able to negotiate up to 12 months extra time to pay your corporation tax arrears, offering a respite from the pressures on your working capital.
It’s important to carefully consider how much you can afford to pay before contacting HMRC’s helpline, however, and understand a little about how the system works. HMRC typically needs to know that you understand why your business can’t pay corporation tax, and exactly how coronavirus has influenced your ability to meet your tax liabilities - if your debt situation started or significantly increased in February/March, for example, or you can pinpoint the lockdown as the cause of financial distress.
Clearly, businesses in some industries such as retail and hospitality were first to be affected, so it’s not altogether surprising if you’re one of these businesses and are struggling with cash flow.
Essentially, HMRC are likely to ask many questions about your situation, which is why professional support is invaluable, whether that’s in preparing sufficient documentary evidence to support your application or asking licensed insolvency practitioners to conduct negotiations on your behalf.
Depending on your circumstances, additional finance may be an option that allows you to pay your corporation tax bill and other debts, whilst boosting working capital for the future.
If HMRC reject an application for more time to pay, a Company Voluntary Arrangement might be an alternative. This is a legally binding instalment plan that allows for debts to be restructured, and all interest/charges frozen.
If you can’t pay your corporation tax due to coronavirus, our partner-led team at Real Business Rescue can negotiate with HMRC on your behalf. Please contact us to arrange a free same-day consultation.
28th July 2021
The number of UK companies in positions of ‘significant financial distress’ were up 24 per cent at the end of the June 2021, as compared to the same point of last year.Read More
22nd July 2021
The Confederation of British Industry (CBI) has called for an “immediate rethink on self-isolation rules” to help businesses manage their workforces as the economy reopens and recovers.Read More