We have heard that HMRC will not support a CVA?
This is not true!
Just because the HMRC have rejected CVA proposals in the past does not mean that they do not support them.
They will approve a CVA if it is a properly structured, a well thought through plan and the company has been compliant with tax rules in the past. In their recent guidelines published at http://www.hmrc.gov.uk/helpsheets/vas-factsheet.pdf they set our their policy.
The HMRC agency that decided on these proposals is called the Combined Voluntary Arrangement Service (VAS). Currently it votes in favour of c.70% of all proposals. However, we have a >80% approval record.
Once a CVA is proposed the enforcement agency of the HMRC is no longer involved and have no say over whether a proposal is accepted or rejected. In essence the job of the enforcement agency is to collect 100% of the tax owed. If this is simply not possible then responsibility passes to the VAS.
The HMRC are keen to support VIABLE businesses as they see it as a way of reducing lost tax.
However, it should be noted that if you do propose a CVA then you should try and pay as much tax as you can prior to the creditors meeting. It is common sense really as if you are asking for their support then you need to be seen to be doing the utmost in persuading them your business is viable and that you will pay any tax owed in the future. We will of course advise on this aspect as and when we draw up a CVA proposal.
If you think you have a viable business then give us a call and we can chat through your options 0800 9700539
Worried about poor cashflow? Covid-19?, How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide includes updates due to Covid-19 For instance there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.