Not paid the deductions of PAYE and NIC across to HM Revenue & Customs? Well, as you will now know that is something that they do not like! Basically, its tax payer’s money and the collectors are there to collect it, no grey areas, just black and white. Pay up on time or they will take action.
If your company is not paying VAT, PAYE & NIC on time then it is probably insolvent, so see our guide to “Is our company Insolvent”.
Non payment of this tax is a failure to comply with the tax legislation and also signifies publicly (loud and clear to HMRC) that the company is insolvent. So, you need to act properly and responsibly and deal with this serious threat to your company.
Remember that if the company is insolvent you could be personally liable for the debts, if you continue to trade, whist doing nothing about the problems that it faces. Wrongful trading can be a real problem where ongoing tax arrears are building up and the company then enters insolvent liquidation.
So, act carefully, keep notes of any decisions and always write names of people you speak to at HMRC down. Take advice from experts, above all act promptly as delay may just lead to more problems for you as directors. If you want to know more about wrongful trading click here.
Once you have read more about the problem on our guide pages like Is our Company Insolvent?, Directors Do’s and Don’ts and Warning Signs? then the options you have available are:
Time to Pay Deal (Click to go to our Time to Pay Programme)
Trading out, visit this guide to how to deal informally with the problem. This can avoid formal approaches like Voluntary Liquidation, CVA, Compulsory Liquidation and Administration.
Don't wait until legal actions have been taken against the company to ask for a "time to pay" deal with HMRC.
Try to plan the cashflow of the business well in advance - you have a legal obligation to do this! If the directors do not think the company has sufficient cash to trade they should consider the obligations and options and plan a way forward.
Don't be too ambitious in planning repayment; you will have bad months as well as good, so be careful with the cashflow forecasts.
Worried about legal actions? go to that page for more details.
Ask for 12 months to pay back PAYE, knowing that you will probably get 6-9 months at most.
Ask for 6 months for VAT.
If your cashflow forecast says you cannot afford that fast a repayment programme, then consider a company voluntary arrangement - CVA.
I don't have a cashflow forecast - can you provide one?
Yes we use a 3 month "rolling cashflow" forecast model. You can buy this from our online shop, download it with all the hard programming work already done for you. All you have to do is insert the payments to creditors on the days you expect to pay, then insert when your customers or factoring company will pay you. The programme then tells you what your cash position is every day!
If your bank overdraft looks like being exceeded then you move payments along a few days. This gives you at-a-glance cash position.
CVA, if the company is viable but insolvent, this is the most powerful way of dealing with a serious cashflow problem and tax arrears (which proves insolvency). HMRC supports well proposed CVA's, you do not have to pay back all of the debt and thirdly you remain in control.
Do Nothing!??? This is not an option as it will lead to: Bailiffs, Sheriffs, walking possession, distraint and more worry - see here for How to deal with Legal Actions
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