If your company has not paid 2020 and some 2021 VAT or PAYE liabilities then we set out below the likely timeline and steps that HMRC will take to recover the debt.
- Your company has not recently had any communication from HMRC about arrears and ongoing payments. This is about to change. HMRC published a guide on debt collection and enforcement policies on 2nd July 2021. Read it here.
- HMRC will write to your company at its registered office warning that your company is in arrears and it should make payments immediately. Or contact HMRC debt collection departments to arrange a deferral, or a time to pay arrangement. If you do not do this HMRC will move to the next step below. It should also be noted that HMRC have written to companies to tell them that they will not be able to claim any future furlough money if they are in arrears.
- Within 14 days of the first letter a second letter will be sent out to your company. This will probably include a summary of the liabilities and a warning that unless payment is made within 14 days HMRC WILL commence debt collection action against the company.
- If your company does not make payment or arrange a deferral or a time to pay arrangement the company will receive a visit from a HMRC field enforcement officer from HMRC or one of its subcontracted debt collection companies. By the way they can visit you at your home if that is where your company is registered. Or they can visit the company’s registered office or business premises.
They do not need to write to tell you they are coming. They have very specific powers and know all of the excuses that you will try it out to them for non-payment! The field enforcement officer may take possession of goods and assets that belong to the company until payment is made. This could stop your business dead in its tracks. No court application is required because the field officer has powers under the Taxes Act To take possession of vehicles, machinery, stock, equipment, furniture and fixtures. If your company cannot make a satisfactory payment arrangement with the field officer goods can be removed
We will only consider collecting tax through insolvency proceedings for example, where customers have been found to be fraudulent, deliberately non-compliant, or where they are continuing to accrue debt with no prospect of being able to settle their existing debts
If you don't make payments to HMRC
Should your company not make payments, your company may be in receipt of a seven day warning letter before or after the field officer has visited. If your company has no tangible assets HMRC will demand full repayment of the debt within seven days or it will issue a winding up petition in the High Court. This will be catastrophic as it may lead to the cessation of the trading of the business and you may be in breach of the insolvency legislation if you continue to trade.
In addition, the winding up petition may be advertised in the London or Edinburgh Gazette. If this happens your bank will freeze your company’s bank account This will lead to a cessation of trade and you lose control.
In addition, the government has recently granted further powers of investigation to HMRC to investigate your conduct as a director especially with regards to the Furlough Scheme, CBILS and bounce back loans. If the company enters into liquidation the liquidator will also investigate your conduct as a director. If it can be proven that assets and cash have been removed illegally from the business you may be held personally liable for this debt. And you may be disqualified as a company director.
There are solutions to all of the above seven steps. The first solution is to stop burying your head in the sand and talk to professional business rescue and insolvency experts who can help you get out of the mess. We will not bite! We will tell you what your options are free of charge and help you solve the company’s problems. SO PLEASE ACT NOW! and avoid losing your business to HMRC debt collection and enforcement agencies. CALL US ON 0800 9700539, we will pay for your call and give you free advice. Stop worrying, stop delaying and get on with sorting the company out!