Construction Company Avoids Insolvency After HMRC Agrees £249k Time to Pay Arrangement

The Challenge

A Norfolk-based construction company contacted RMT and Company Rescue after experiencing serious cashflow pressure.

The business was fundamentally viable and had recently produced strong accounts, showing a pre-tax profit of approximately £188,000. However, a slowdown in activity, combined with slow customer payments, had placed pressure on working capital.

VAT, CIS and corporation tax payments were becoming unaffordable, while some suppliers had placed the company on stop or pro-forma terms. One creditor had also begun making legal threats.

Although the company had no bank debt and no unsecured loans, the directors recognised that the position needed to be addressed quickly. The business had a strong order book, but without a credible plan, there was a real risk that creditor pressure could escalate into a formal insolvency process.

Solution

RMT reviewed the company’s financial position and prepared a strategy report setting out two possible routes.

The preferred option was an informal Time to Pay arrangement with HMRC. This would allow the company to avoid formal insolvency, continue trading, and make structured monthly repayments from future cashflow.

A Company Voluntary Arrangement was also considered as a contingency plan if HMRC could not support the proposed repayment terms.

RMT assisted with the HMRC engagement process, including obtaining authority to speak to HMRC on the company’s behalf. The proposal was based on the company’s ability to continue trading, collect debtors, convert work in progress into cash and make regular affordable payments.

Result

HMRC accepted a Time to Pay arrangement covering PAYE, VAT and corporation tax liabilities of approximately £249,000.
The agreed plan required monthly payments of approximately £6,158, with the final payment due in June 2029.
This was a very positive outcome. It avoided the need for a formal insolvency process, allowed the directors to remain in control, and gave the business breathing space to continue trading while repaying HMRC in full.
For HMRC, it offered a better outcome than forced insolvency. For the company, it provided a clear route forward.

This case shows how early advice and a well-structured Time to Pay proposal can help a viable business avoid unnecessary insolvency.