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What happens to your limited company if you ignore HMRC?
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What action can HMRC take if I fail to respond?
If you ignore HMRC or fail to respond to their requests about your financial affairs, you could face a penalty, receive an HMRC enforcement notice about a scheduled visit from HMRC officers/independent bailiffs, or HMRC could issue a statutory demand which could lead to the forced closure of your company if ignored.
If HMRC make contact with you it’s important not to ignore them, but to respond as quickly as possible to resolve any issues or problems before they get out of hand. If you do ignore them, HMRC will continue to try to obtain a response, and the longer it takes, the worse your situation can become.
Whether they’re contacting you about a penalty notice, it’s a reminder to pay your tax bill, or a straightforward request for information, HMRC has wide authority and powers of enforcement that can ultimately mean the end for your business if you don’t respond.
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HMRC might contact you for a telephone or written response, or to inform you that action is needed over a specific matter. These are just a few potential situations:
- Not filing your company’s tax return or other statutory documentation
- Failing to file your accounts
- Not keeping proper business records
- Paying the company’s tax bill late, or not paying at all
- Continuing to trade when you know your company is insolvent, or you’re aware that it could be
- Failing to provide a security bond when requested
Ignoring HMRC can put you and your company in a difficult situation - they can take action quickly if they believe you’re insolvent or are deliberately not responding.
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.
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HMRC has broad powers to enforce their decisions and requests. These typically involve penalties and other financial sanctions against your company, but also potentially personal liability for you and other directors, and closure of your company.
HMRC run a stringent penalty regime for companies that don’t adhere to the rules and regulations, and they’re quick to apply it. If you miss a tax payment by a single day, for example, your company will receive a penalty of £100.
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HMRC enforcement officers
If you receive an Enforcement Notice from HMRC, it means they intend to send bailiffs to recover business assets to the value of the debt. The officials may be HMRC officers or independent bailiffs who have been appointed by HMRC, and their ultimate aim will be to put in place a Controlled Goods Agreement.
HMRC’s enforcement office might send a 21-day statutory demand to your company. If the demand isn’t paid, or is ignored, it’s likely to be followed by a winding-up petition. You then have only seven days to save your company from compulsory liquidation, and need to act very quickly.
HMRC Time to Pay arrangement
HMRC understand that some businesses experience temporary issues with cash flow, and at times genuinely can’t pay their tax bill when it falls due. If they believe the company is viable, and you’re not deliberately avoiding payment, you may be able to negotiate for more time.
A Time to Pay arrangement, or TTP, is an instalment plan that typically lasts between three and six months, and allows you to pay your arrears without further late payment penalties. If you miss a payment, however, or ignore their communications, they can petition through the courts to have your company wound up.
Obtaining professional help
If you ignore reminders and other contact from HMRC, they’re likely to take swift action against you. Even if you resolve the matter at a later stage, your lack of response will remain on your file and could negatively affect your future dealings.
They’ll see that you were unresponsive at this time and assume that it was a deliberate refusal to deal with the situation, or worse, they could suspect tax avoidance or tax evasion. Ignoring HMRC doesn’t only create tangible problems for your company, it jeopardises your future relationship.
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.
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Real Business Rescue has extensive dealings with HMRC and we understand how their systems work. We can provide invaluable advice on how to communicate and negotiate with them, and can do so on your behalf if needed.
Please call one of our licensed insolvency practitioners to find out more. We operate a broad network of offices around the country, and offer free same-day consultations to quickly deal with any issues.
Further Reading on What happens to your limited company if you ignore HMRC?
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