Is your company coming under pressure from HM Revenue and Customs to pay its PAYE, VAT or other tax bills? Many companies fall behind in their tax payments to HMRC, resulting in a range of responses aimed at collecting overdue payments.
If your company has tax debts, it’s important not to panic. You’re not alone – HMRC deals with tens of thousands of late payments from companies every year and has a range of systems in place to allow companies to catch up.
It’s also important to remember that, although HMRC has the power to demand its payment from your business and potentially initiate liquidation, its collectors want to ensure your company pays and will, to a certain extent, provide assistance.
In this guide, we’ll explain what happens if your company has tax debts to HMRC or fails to make its payments on time. We’ll also discuss payment options, such as the Time To Pay arrangement, to help your company pack its tax bill to HMRC in full.
What happens if your company has tax debts?
If your company falls behind in its payments to HM Revenue and Customs, it faces a range of responses. Falling far behind schedule on a large tax bill could cause HMRC to become concerned about your company’s financial solvency.
As company director, it’s important that you’re aware of your company’s financial status. Struggling to pay taxes, or paying taxes far behind schedule due to cash flow issues, is a strong signal that your company may be insolvent.
If your company receives a warning letter from HMRC alerting you to overdue tax bills, you should review your company’s financial position. Your company might be insolvent, in which case you will need to take immediate action.
We’ve assisted hundreds of UK companies with tax debts. If you’re facing pressure from HMRC or simply have concerns about your company’s taxes, we can offer tax advice and solutions for payment to stop your company from becoming insolvent.
HM Revenue and Customs deals with tens of thousands of cases of overdue tax bills every year from both small and large companies. As such, there are several systems in place to facilitate payment of taxes for companies with tax arrears.
One of the best options for many companies is a Time To Pay arrangement, which is also known as a TTP. Time To Pay allows your company to work out a new payment timeline with HMRC so that it can pay its taxes without affecting cash flow.
TTP arrangements are typically made for a period of six to 12 months, giving your company a greater amount of time to pay its tax debts. Entering into a Time To Pay arrangement requires that your company is solvent and commercially viable.
Your company will need to indicate to HMRC that it can comply with the terms of its TTP arrangement. We can help your company apply for a Time To Pay arrangement to reduce the burden its tax debt poses to cash flow and continued trading.
Unlike other creditors, which need to receive a winding up order to liquidate your company’s assets, HM Revenue and Customs can seize your company’s property in order to recover its tax debts.
Failing to comply with a demand letter from HMRC or breaking the terms of your company’s Time To Pay arrangement could lead to HMRC deploying enforcement officers to seize your company’s physical and financial assets.
Because of this, it’s important to ensure that your company has a good relationship with HMRC. We’ve assisted hundreds of UK businesses with tax debts and can help your company reach a suitable agreement with HMRC to clear your tax arrears.
If your company can’t enter into a Time To Pay arrangement with HMRC, it also has a wide range of other options available to protect itself from asset seizure, company liquidation or other actions from HMRC.
These include entering into a company voluntary arrangement (CVA) with HMRC and your company’s other creditors. A company voluntary arrangement protects your company from winding up orders or asset seizure initiated by HMRC.
Other options include entering into administration or a pre-pack administration sale. Pre-pack administration allows you to purchase your company’s assets and begin trading through a new company, or sell its assets to a third party.
Finally, your company may be able to access emergency financing to help it pay its tax debts. We can assist your business in securing the financial help it needs to pay its tax debts and end pressure from HM Revenue and Customs.
Dealing with pressure from creditors is always stressful – with a creditor as large and legally powerful as HMRC, it can be a nightmare. However, with the right help and assistance, your company may be able to reach an arrangement with HMRC.
We’ve helped hundreds of UK businesses with tax arrears negotiate Time To Pay arrangements with HMRC that let them continue trading without issue. Contact us now to learn more about your options when dealing with HMRC tax debts.