Updated: 18th November 2020
“Please pay £XXXX. We have written to you about paying your Corporation Tax but you still owe the amount shown above. We will now pass your debt to a Debt Collection Agency.
There is still time to stop us taking this action but you need to act fast. We are still charging you interest daily. You are incurring more costs every day.
Corporation tax is due for every limited company nine months after the company’s accounting period has come to an end, i.e. the company’s year-end was September 30 which means the tax is due at the end of June the following year. However, if you are late paying this tax, HMRC will not be best pleased and inundate you with letters demanding payment whilst adding interest to the amount due.
If you are unable to pay your corporation tax, the company is insolvent. Insolvency is defined by being unable to meet tax liabilities and you need to speak to a licensed insolvency practitioner as soon as possible – you can do this free of charge in a one-to-one setting at your nearest Real Business Rescue office.
HMRC isn’t often renowned for being easily negotiable but one potential option is to approach them, be honest about your situation, and try to arrange a Time To Pay agreement. However, if the debt cannot be paid off in one year, HMRC will not negotiate and the debt must be paid in full which can have dire consequences for not only your business but also you personally – particularly if you owe the company money in the form of an overdrawn director’s loan account.