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I can't pay VAT or PAYE - Will HMRC give me time to pay?

Written by Keith Steven Managing Director 1 February 2022

The company is behind with its VAT payments! What can we do? Could we ask for time to pay?

If your business has tax problems, i.e. can't pay VAT or PAYE, then the company is probably insolvent! You must act to do something about this and we will show you how. See our guide to "Is our company insolvent?". 

If your business or company has not paid the VAT across to HM Revenue & Customs (HMRC), then there is a strong possibility HMRC will take action against the business. Basically, it's tax payer's money and the tax collectors are there to collect it. There are no grey areas, just black and white. After all, HMRC has heard every excuse and will know your company is in financial difficulty, or the tax would have already been paid. 

When companies face cashflow crises, management is struggling to cope and failure is imminent, often the major creditor pressure is from one source – HMRC.

As of 1st December 2020 HMRC became a preferential creditor, now ranking ahead of the bank's floating charge.  Consequently, this may well mean that lenders who have issued loans, that you have personally guaranteed, will get less recovery.  This risks exposing you financially .

Banks worry about the pressure that HMRC can bring to bear; bailiffs, distraints, winding up petitions. These can precipitate the failure of the company and bankers worry about their ability to control this. What happens if their client gets a winding up petition from HMRC?

KSA Group are experts at negotiating with HMRC.  HMRC are "sophisticated creditors" in that they know all the procedures and rules.  You therefore need professional advice to make sure of the best outcome to save your business and stop the bank closing it down. 

Do not be tempted to borrow money from online lenders to pay a HMRC bill unless you are sure you can pay it back.  These loans almost always have a personal guarantee requirement so you can become liable for the company's debts! 

What are the available options for VAT and PAYE arrears?

There are some options for dealing with tax arrears, but many people don't know where to start.

Vat Payment Helpline Phone Number

It is worth calling HMRC’s Business Payment support services telephone number on 0300 200 3835. It’s open from 8am to 8pm Monday to Friday, and from 8am till 4pm at weekends.

Options include:

Ask for time to pay the debt, or a TTP as we call it, if your company can't pay VAT. HMRC provides a "Business Payment Support Service".  Using this service, all SMEs which have cashflow issues and good compliance, should be able to get a Time to Pay arrangement with HMRC. If you need help, call us or call the HMRC's Payment Support Service on 0300 200 3835.

HMRC will want to know:

  • Your company's tax reference number
  • Your name and/or the name of your business
  • Your/the business's address including the postcode
  • A contact telephone number
  • Details of the tax that you believe your company will have difficulty paying

If you contact this service, you will need to explain why:

  • Your company is unable to pay in full and on time
  • What you have done to try and raise the money to pay the debt
  • How much your company can pay immediately
  • How long you think your company will need to pay the rest
  • Depending on why your company can't pay, what your payment history has been and how long it needs to pay the rest.. HMRC will ask you a number of questions so that they can judge the company's ability to pay this debt via future payments.

Ask us, KSA Group, to arrange a time to pay deal if your business can't pay VAT or PAYE. As licensed insolvency practitioners, we are very highly regarded by HMRC and deal with them in offices right across the country. We will need to know all of the above details and also do some financial forecasting work in order to establish what the company can afford to pay back and over what period. Call now for this expert service on 08009700539

Consider a company voluntary arrangement. This will take the pressure off straight away. We are the UK's leading CVA experts with huge experience of arranging CVA deals with creditors, including HMRC. This allows tax debts to be partially written off. It also allows your company to cut costs, make redundancies and plan a turnaround.

The administration or pre pack administration solution. These very powerful techniques can help protect the business assets and sell them to new company or third party. This will protect the company from aggressive legal action by HMRC. 

Can you introduce more money into the company to pay the tax debts? Could you raise money from the bank, or get a VAT Loan for example?

Visit this trading out guide to see how to deal informally with the problem. This can avoid formal approaches like voluntary liquidation, CVA, compulsory liquidation and administration.

It is estimated that over 200,000 companies are on some form of payment plan and many are failing to keep up with them. 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 by dealing with this serious threat to your company. If your company needs urgent help - call us now for free on 08009700539 or email our advisors on We can help with a time to pay deal or other turnaround options.

Note: due to Coronavirus, the Government put in place schemes to support businesses who were struggling to pay back their VAT. VAT could be deferred until 21 June 2021. Businesses were able to make interest free monthly instalments (up to 11) – the idea being the earlier you join the more months you have to spread the VAT payments across. As this deferrment has come to an end then you need to act if you cannot pay.

Personal Liability

If the company is insolvent, you could be personally liable for the debts if you continue to trade whist doing nothing about the problems the company faces. Wrongful trading can be a real problem if ongoing tax arrears are building up and the company enters insolvent liquidation. Failure to pay NIC could result in a personal liability notice from HMRC.

So, act carefully, keep notes of any decisions and always write down names of people you speak to at HMRC. Take advice from experts, and 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.

Tips for dealing with HMRC tax arrears

Don't wait until legal actions have been taken against the company to ask for a Time to Pay deal with HMRC. It is better to ask for help BEFORE arrears build up. 

Try to plan the cash flow 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 plan a way forward. 

Don't be too ambitious in planning repayment. Your company will have bad months as well as good, so be careful with the cash flow forecasts. Do you want a free cash flow model? Email for advice. 

Ask for 18 months to pay back PAYE, knowing that you may get 9-12 months at most. Ask for 12 months for VAT and they might accept or offer 6 months. 
If your cash flow forecast says the company can be viable, but the business cannot afford a relatively fast repayment programme, then you must consider a company voluntary arrangement (CVA).

Has HMRC issued a winding up petition or threatened to petition against your company because you can't pay VAT or PAYE? If so, get help now by calling our free helpline or see this page for more details on dealing with a winding up petition.

Don't wait too long to get professional turnaround help. Call the experts on 0800 9700539

Category: HMRC Time to Pay Arrangement

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