What help is there for companies with HMRC tax debt?
There is help for companies in arrears with HMRC for falling behind on their tax payments. The main source of support is a Time to Pay (TTP) arrangement which can be negotiated with HMRC by a company with tax debts. As the name suggests, you will be given additional time to repay the tax you owe and bring your account up to date.
Expert help when dealing with HMRC company tax arrears
If your company is struggling with HMRC debt and tax arrears that it cannot afford to repay, you should seek expert help as a matter of urgency.
It is of paramount importance that you are open and honest with HMRC when you are experiencing cash flow issues and are in danger of falling into arrears. If your company is late paying taxes it will alert HMRC that your company is potentially insolvent and this can be the start of intense scrutiny from the taxman. By communicating regularly with HMRC, you stand a much better chance of coming to a mutually-agreeable arrangement which suits both parties.
The key to dealing with VAT, PAYE and Corporation Tax arrears is understanding the solutions that are available for your struggling business. To understand which option is best for your individual situation, you can talk confidentially and completely free of charge with one of our insolvency practitioners. It is always our priority to help you stay in business, so if anything can be done to satisfy HMRC, we will walk you through the solution and can liaise with HMRC on your behalf.
Tax Debt Help: Time to Pay Arrangement
One common solution to HMRC debt problems is the Time To Pay arrangement which is a formal agreement with HMRC that allows companies longer to pay the tax it owes.
A Time to Pay arrangements runs over a fixed period which is typically between 3-12 months. HMRC will need to be confident that you will be able to stick to this arrangement and repay all the taxes in full over the course of the Time to Pay arrangement. If your company needs a longer instalment plan, we can talk you through other recovery options that are more suited to your circumstances.
What should I do if my company has HMRC tax debts?
It’s important to remember that HMRC will make every effort to get the money that is due to them and this can go as far as sending Enforcement Officers to seize business assets – so the worst thing you can do is put your head in the sand. We have vast experience in helping businesses who can’t afford to pay their taxes and in smoothing out disputes with HMRC where relations have taken a turn for the worse.
For more information you can arrange your free consultation with a Real Business Rescue specialist at one of our UK offices or you can call our dedicated director hotline for immediate and confidential advice from a licensed insolvency practitioner.
How HMRC debts can lead to company insolvency
When your company is having trouble paying HMRC tax bills such as PAYE, VAT, or Corporation Tax, there is a high probability that the business could be insolvent. Company directors operating an insolvent business have a legal duty to act in the best interests of creditors (including HMRC) which typically involves ceasing trading immediately, especially if there is no realistic prospect of recovering from the financial difficulties being experienced.
If you believe your company could be insolvent, you should make it a priority to seek the services of a licensed insolvency practitioner. A licensed insolvency practitioner will be able to help you understand your options for dealing with your HMRC tax debts and also ensure you remain compliant of your legal obligations as the director of an insolvent limited company.
Failure to address tax problems will signal to HMRC that your business is indeed insolvent, prompting them to take action to recover the debt and possibly issue a winding up petition against your company, which would ultimately result in the compulsory liquidation of the business. If you owe HMRC but are afraid you won't be able to come up with the money to pay on time or in full, consider the following solutions:
“After submitting my '60 Second Test' I received a complimentary Insolvency Options guide packed full of useful information. The team of insolvency specialists phoned me back in less than 10 minutes after reviewing my details and guided me through the next steps. Really helpful! Thank you Sophie!”
1. Contact HMRC and Negotiate with Them The first option is to contact HMRC's Business Payment Support Service (BPSS) - 0845 302 1435 - and ask them about setting up a Time to Pay arrangement. However, this route is understandably intimidating for many directors. Keep in mind you'll need to have some information ready when you call, including:
Basic information about your business (i.e. - company name and registered address)
Details about the tax arrears you're having problems paying
You'll also need to have an explanation for why you you're unable to pay on time and in full, efforts you've taken to attempt to obtain the funds needed, how much you'll be able to pay towards the debt immediately (if any), and much additional time to pay you will need.
When negotiating with HMRC you will need to propose a monthly repayment amount which strikes a balance between being significant enough to satisfy HMRC and clear your arrears in a timely manner, while also being affordable for your company. Offer too much or too little, and HMRC may reject your request for a Time to Pay arrangement.
2. Have Us Negotiate a Time to Pay With HMRC On Your Behalf You always have the option of asking an insolvency firm - such as Real Business Rescue - to handle the negotiations with HMRC on your company's behalf. We will work with you to do some financial forecasting so we'll be equipped with the information needed to propose the most appropriate and ultimately viable terms to HMRC. As licensed insolvency practitioners we have extensive experience in dealing with HMRC and successfully negotiating more favourable repayment terms.
3. Obtain Additional Financing Depending on the position of your company, you may be able to access a channel of funding which could help you clear the tax debts you owe to HMRC. This could be in the form of a standard business loan, refinancing company assets, or a form of invoice finance.
Care should be taken when adding more borrowing to an already indebted company. If you believe your company is insolvent you should not take out any additional finance without the prior consent of a licensed insolvency practitioner. Obtaining finance when your company is knowingly insolvent is a breach of your legal duties as the director of an insolvent company.
Dealing with HMRC debts?
If you are experiencing pressure from HMRC for unpaid tax liabilities, you are far from alone. In fact HMRC is the most common creditor of businesses in the UK. For expert help and advice in tackling your tax debt, call our team. The team are available now - 0800 644 6080
4. Propose a Company Voluntary Arrangement (CVA) A Company Voluntary Arrangement (CVA) is a formal agreement between your company and its creditors (including HMRC) that allows for lower monthly payments and a centralised payment for all of your unsecured debts. If approved by creditors, this is an effective way to protect you company from legal action being taken by HMRC or any other creditor. You would need to instruct an insolvency practitioner to draft the CVA and propose it on your behalf. A CVA could be appropriate if you have multiple creditors and debts that you're wanting to restructure and your company has a viable future.
5. Enter into Administration If you believe HMRC may be looking to wind up your company it may be best to go ahead and enter into company administration, which is a formal insolvency procedure in which the directors of your company would appoint an insolvency practitioner to serve as the administrator of the business with the goal of facilitating a recovery.
6. Arrange a Pre-Pack Administration Sale If a recovery seems unlikely and you don't think the company will able to repay HMRC and all of its creditors, but you don't want to lose all of the company's assets and work in progress, you may want to consider a pre-pack administration sale, in which the directors could arrange to purchase some or all of the assets via a new company.
Need to speak to someone?
If your company is struggling with unmanageable debts, squeezed cash flow, or an uncertain future, you are far from alone. We speak to company directors just like you every single day, and we are here to give you the help and advice you need. Call our team today on 0800 644 6080
How Real Business Rescue can help with HMRC tax debts
If you have reason to believe your company is insolvent, speak to the experts at Real Business Rescue. We can help you understand your current position and deal with HMRC on your behalf. Call today on 0800 644 6080 to arrange an appointment with a licensed insolvency practitioner.
What happens after the CVL?
Upon completion of the CVL, the company will be struck off the register held at Companies House and the company will cease to exist. Any liabilities which remain unpaid by the company will be written off, unless they were personally guaranteed.
During liquidation the liquidator is required to investigate any actions taken by the directors (and former directors within the last 3 years). If it is found that they did not fulfil their fiduciary duties while knowingly insolvent, or conducted transactions which were to the detriment of creditors and challengeable, they may be found guilty of wrongful trading, fraudulent trading or misfeasance. This could result in the directors being held personally liable for some or all of the company’s debts, and they may be disqualified from acting as the director of any company for a period of up to 15 years. However, this is extremely rare and in the vast majority of cases, and directors are free to move on and even set up another business if they so wish.
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Further Reading on HMRC Tax Debt: Help and Advice for Directors
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