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HMRC 7 Day Warning Letter of Enforcement by Distraint or a Petition

Written by Keith Steven Managing Director 3 July 2019

Example HMRC 7 day warning letter

HMRC 7 Day Warning Letter of a Petition

You will receive an HMRC seven day warning letter if you are late with your tax payments and VAT and PAYE remains unpaid. It is designed to lead you to a negotiation for payment of the debt.

The letter itself states that if the payment isn't made, the Solicitor of HM Revenue & Customs will present a petition to the High Court to wind up the company due to its insolvency or start other legal actions.  This is in effect, a letter before action.

Attached to the letter will be a statement of liabilities outlining the debts this warning letter covers.

What is HMRC likely to do?

They have a number of aggressive debt collection tools available:

  1. Issue a County Court Summons to get a County Court Judgment
  2. Send in a Revenue officer from their Field Force or send a Bailiff after a Notice of Enforcement
  3. Issue a winding up petition following the letter.

You must act quickly to rectify these issues as the petition must be advertised in the London/Belfast Gazette within 7 business days of being issued. This can lead to the company's bank accounts being frozen and other creditors supporting the petition, therefore making it harder for the company to be salvaged, as more organisations need to be paid.

What should I do if I can't pay?

First things first, don't just ignore the letter - HMRC will automatically take action if they don't receive a response within 7 days. The ideal way to solve this issue is to pay the debt. However, many companies are not in a position to do so. Want to avoid all of this? There is a great solution for your company's problem called a Company Voluntary Arrangement (CVA). A CVA is simply a deal between the insolvent company and its creditors; this deal places a legal ring fence, called a moratorium, around the company and stops creditors attacking the company. It allows a viable but struggling company to repay some, or all, of its historic debts out of future profits, over a period of time to be agreed.

Directors stay in control of the company with KSA providing support. It can stop legal actions like HMRC actions or winding up petitions, if you use a quality, experienced advisor.

So what can HMRC do to collect its tax arrears?

They can issue:

  1. County Court Summons
  2. County Court Judgement (CCJ)
  3. Bailiff actions or warrant
  4. Notice of enforcement
  5. Winding Up Petition

Visit our page on creditors legal actions for definitions and advice for all the above.

The most important thing is really not to ignore the letter. If HMRC say they will take action in 7 days they usually will, whether it is by issuing a petition or by coming to your business to issue a notice of enforcement which results in them taking your stock or assets. Generally speaking, prompt action will help keep costs down as there are often additional charges added to your existing tax liabilities. This is particularly the case if HMRC employ an outside agency to collect any debts.

Do you want DIRECT, BESPOKE advice for your business? Call us on 08009700539.

Categories: HMRC Time to Pay Arrangement, HMRC Time to Pay Arrangement for VAT and PAYE

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