Reviewed: 9th February 2015
No matter what size of company you own, paying taxes is a major part of being in business which is why HM Revenue and Customs (HMRC) is one of the biggest business creditors of UK companies.
Tax is payable on many business operations through VAT, PAYE and Corporation Tax. In theory, businesses should be making provisions for these bills throughout the year so that when a tax bill arrives the company will have the funds to pay it, but in reality, if a company is having cash flow problems then this is unlikely to happen.
When faced with a number of invoices and a tax bill, many companies in this situation may be more inclined to settle their supplier invoices first as they can’t trade without their supplier. However, if you’re overdue with a tax bill or you’re not able to pay in full, it is important not to ignore the situation. There are penalties for late payment of taxes and interest may be charged too, so speak to them as soon as you know there is a problem.
HMRC can take a number of actions to get the money that they’re owed. They may send the debt to a debt collection agency, send in enforcement offers to seize company assets or they could issue a winding-up petition against your company if you owe more than £750, which could ultimately force you out of business.
Whilst talking to HMRC may be a daunting prospect for many company directors, it is crucial that you contact them as soon as possible in order to avoid them taking enforcement action against your company. If you’re unable to pay on time or in full then HMRC can offer you more time through a Time to Pay plan that will allow you up to a further 12 months to pay and allow you to pay in instalments. However, they will only offer this if they are confident that your company will be able to stick to the payment plan, so it’s important to be upfront and honest with them about your cash flow situation. You can always appoint an accountant or insolvency practitioner to talk to HMRC on your behalf if you feel that you’re unable to deal with the negotiations yourself. With 55 offices stretching from Inverness down to Exeter, Real Business Rescue can offer unparalleled director advice across the UK.
4th December 2018
The number of independent retailers who closed down outlets during the first half of this year reached a record high level for any comparable period.Read More