HMRC Payment Problems - Worried Directors Guide

8 August 2017

We face HMRC payment problems. What can we do?

If your business is behind with PAYE and VAT payments, then your business may be insolvent!

Then you MUST ACT or you may get one of these; 
A HMRC 7 day warning letter (click on the thumbnail) 

HMRC are what are called "sophisticated" creditors. As such, they know all the tricks in the book in order to collect monies owed.The HMRC will always pursue a debt.Sometimes a company thinks it has got away with not paying as they haven't heard from HMRC for years and then suddenly a demand comes along!

Another important point to note is that if the HMRC say you owe them £50k then you do owe them £50k. I.e there is no dispute. They do not need to go to the court and request a County Court Judgement, followed by a Statutory Demand. The HMRC will write and if the money is not paid they will go straight to the next step issuing a winding up petition. HMRC issue some 60% of the winding up petitions against UK companies.


Read our latest news on how the HMRC are dealing with tax arrears

HMRC are getting more aggressive. Over 250,000 companies in 2016 were on some form of payment plan and many are failing to keep up with that time to pay plan. Many are seeing aggressive threats like winding up petitions from HMRC. 

Non payment of PAYE and VAT demonstrates to the HMRC that the company may be insolvent. So, you need to act properly and responsibly and deal with this serious threat to your company.

Could I be personally liable?

If a company is insolvent you maybe held personally liable for the debts, if you continue to trade KNOWING the business is insolvent and doing nothing about it. Wrongful trading can become an issue where there are ongoing tax arrears 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. 

What are my options?

Once you have read more about the problem in our guides (Is our Company InsolventDirectors Do's and Dont's and Warning Signs), the options you have available are:

1). Ask for time to pay the debt. HMRC has a Business Payment Support Service: However, in order to be approved for this you will need to have had a good compliance record in the past and have a good reason to convince the HMRC that you are going to be able to repay the debt. Warning! Any missed payment will often trigger HMRC to issue the 7 day letter action as shown above.

2). Or consider a company voluntary arrangement if the problems are serious enough to mean that you

3). An administration solution may protect the company from aggressive legal action from HMRC.

4). Finally, can you introduce more money into the company to pay the tax debts?

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.

Tips for dealing with Arrears.

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 wait until legal actions have been taken against the company to ask for a "time to pay" deal with HMRC. Its better to ask for help BEFORE arrears build up.

Don't be too ambitious in planning repayment; Email keiths@ksagroup.co.uk for advice on how to do this. We can send you daily cashflow forecast

Ask for 18 months to pay back PAYE, knowing that you will may get 9-12 months at most.

Ask for 12 months for VAT and they may accept or offer 6 months.

If your cashflow forecast says the company can be viable, but the business cannot afford that fast a repayment programme, then you must consider a company voluntary arrangement - CVA.

Don't wait too long to get professional turnaround help. Call the experts on 08009700539

Please call or email us for further details.

The Ultimate Guide For Worried Directors

The Ultimate Guide For Worried Directors

Worried about poor cashflow? How to win new work? How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today.