Updated: 8th January 2020
Paying taxes is a major part of being in business, which is why HMRC are the biggest creditor of businesses in the UK. HMRC will not hesitate to chase any company that is late paying their tax. What course of action they take will depend on your company situation and the amount you owe. If you’re having difficulty paying a tax bill, contact HMRC to explain the situation as soon as possible, ideally before the due date. The sooner you speak to them, the better as they will continue to purse you until the debt is settled. There are penalties for late payers, so tackle any problem early on. Having overdue tax bills can be a worrying time for any company director, but you must to speak to HMRC and explain your situation. If they don’t know that you’re having problems they’ll assume that you won’t pay, rather than can’t pay. If you’re daunted by the prospect of dealing with HMRC you can always appoint an accountant or insolvency practitioner to talk to them on your behalf.
In the first instance, HMRC may agree to a payment plan through a Time to Pay agreement, which will allow you to pay the tax due in instalments, usually over 6-12 months (sometimes less for PAYE and VAT). Time to Pay will only be offered if HMRC are confident your company can stick to the payment plan. However, interest will to be added to the amount you owe until it is all settled. Sometimes, HMRC will pass your case to a debt collection agency who can also offer you time to pay. In certain circumstances, such as sudden illness or short-term problems, HMRC may agree to suspend their collection action for short period of time, so contact them if you think you have exceptional circumstances.
If you don’t stick to any agreed payment plan then HMRC will take further action. They may send in enforcement offers to seize company assets, issue a statutory payment demand or they could issue a winding-up petition against your company, which could ultimately force you out of business.
Receiving a winding-up petition is a very serious threat to your business. If you receive a winding-up petition you must take action quickly. You’ll have 7 days to respond and to try and save your company before the court can grant a winding-up order. Once a winding-up order has been granted, there is nothing that you can do and your business will be liquidated with any money raised from the sale of your assets being used to repay your debt. You can stop a winding-up petition by paying the debt (plus interests and costs) off in full. If this isn’t an option, then you can stop a winding-up order by proposing a Company Voluntary Arrangement to give you more time to pay, or if that is not successful then you could apply to the court to have the company put into Administration. An insolvency practitioner will be able to advise you on the best course of action. They understand the time pressure that you are under and can work very quickly. -We have an extensive network of 78 offices offering confidential director support across the UK.
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