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Why will HMRC not agree a payment plan for my debt?

Date Added: 22/01/2016  

It may be that you have not provided sufficient proof to HMRC of your debt management capabilities. Debt collection is a serious matter for HMRC and before putting a TTP arrangement in place they will want to see that:
  • You can pay off the debt within six to twelve months, or possibly slightly longer
  • You can still meet your ongoing tax obligations for VAT, PAYE and Corporation Tax.
 If a TTP arrangement is not appropriate for your debt, then there are other options available to you, including:
 What is a CVA?
A CVA is an agreement or proposal to pay a portion of the debt that you can realistically afford i.e. less than the total debt. In this situation an Insolvency Practitioner would nominate a realistic but fair sum to be paid over a set time frame, e.g. 25 to 50% of the debt paid back over five years. This will usually provide a better outcome for HMRC than liquidating the company, so they will often accept a CVA.
Importantly, informing HMRC that you are preparing a CVA will usually mean they are able to put debt recovery on hold, reducing your stress levels and also reducing the threat of legal action.
Is commercial lending a solution for tax debt settlement?
If your business has assets such as property, stock, equipment or vehicles, then you may be able to gain access to asset finance to settle your HMRC debt. If you already have business loans, it may be possible to restructure the lending to provide your business with additional funding. It is vital to seek professional advice regarding finance, as this may not be the right solution for your business and could potentially put you in a worse position.
HMRC debt collection: what if liquidation is the best option for your business?
You MUST talk to a specialist to fully understand your options, but it may be that insolvency is the best solution. Many business owners feel intense relief when they are finally able to stop battling.
Your insolvency options are:
  • Liquidation
  • Pre-pack Liquidation or Business Phoenix
  • Administration
  • Pre-pack administration.
For more information about these options, look at our 4R Business Recovery HMRC Debt Guide.
If you need help setting up a TTP arrangement, or you would like to talk through finance or insolvency options, call 4R today on 0800 90 20 123. Remember, the more quickly you take action, the more options are open to you. You can also get in touch via our contact form

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