“I need longer than 12 months to pay so how do I protect my business if I cant pay HMRC”


HMRC are as concerned about stopping insolvent companies accruing future tax debts and using tax revenue to support short term cash flow as they are about recovering tax arrears. This often frustrates directors who simply don't understand why HMRC have rejected offers to repay over time.

If you ignore the tax debt, HMRC will take action to recover it and close the company down. As explained above, this could have significant impact on the directors who may be held personally liable.

If you can make a good case by demonstrating clearly that the business can afford to make repayments and can make weekly payments by DD then HMRC may agree to loner than 12 months, but as a rule they will only grant TTP arrangements of between 3 and 12 months.

If you need longer than 12 months for what ever reason then you should consider a formal insolvency procedure, such as a Voluntary Arrangement, this will help to restructure your debt and allow you to continue to trade and meet your ongoing creditor obligations.

A Voluntary Arrangement will prevent past creditors from taking any legal or recovery action against the company and all creditors will be bond by this whether they consent or not.

A CVA (Company Voluntary Arrangement) or an IVA (Individual Voluntary Arrangement) may be a better solution than a TTP as it allows you to negotiate with all your creditors. Time to pay arrangements are relatively short term, typically 12 months, but a CVA usually lasts longer – between 1 and 5 years. When a company is insolvent with tax arrears, a winding up order or liquidation by HMRC can result in directors being made personally liable and subject to Directors Disqualification Orders (DDO’s). Directors’ drawings, dividends and pay can all come under close scrutiny. HMRC are increasingly pursuing directors, but personal liability can be avoided if a Company Voluntary Arrangement can be agreed with creditors. 4R are in the business of second chances and we believe a CVA is an excellent solution for companies confronted with tax arrears. Watch the 4R video on HMRC debts for more information.

If the business isn’t viable anymore, you may want to liquidate and walk away. On the other hand, you may want a second chance. We can assist you in reviewing your current situation and provide options for the old insolvent company, including creditors voluntary liquidation and pre-pack administration. You can then purchase the company’s assets, goodwill and intellectual property rights to create a new phoenix company. This allows you to write off the company’s debts – including money owed to HMRC.liable.

Top Tip:

By engaging business turnaround and rescue professionals such as 4R, and or licensed insolvency practitioners, you are acting in the best interest of your creditors – you have acknowledged the problem and sought professional guidance on the solutions available. If that solution is a Company Voluntary Arrangement (CVA), then 4R and the insolvency practitioner will be working with all your creditors to reach agreement which is a better outcome for all stakeholders than a liquidation. The insolvency practitioner supervises and manages the repayments and steps in the shoes of all creditors. If the decision is to liquidate, the cost is borne by the company – HMRC are spared the expense of a winding up petition, which would be borne by the tax payer. At the end of the day, HMRC will work with us because we offer a professional solution to tax debts.

Final Top Tip:

Get professional help now to independently assess your business performance and free cash flow. There is very little point struggling with a TTP arrangement for six months, with all the stress of cash flow becoming tighter and tighter. Your business may need to be restructured now, and if you work with a Business Turnaround Specialist like 4R we can help restructure the business and keep you in control but significantly reduce the company debts, improve profitability and generate positive cash flow.

Ask 4R Business Recovery to prepare a detailed cash flow and time to pay arrangement on your behalf. We are experienced in working with HMRC – you stand a better chance of securing a time to pay arrangement if the proposal is professional and backed up by us.

We’ve helped hundreds of businesses deal with HMRC debts and tax arrears. If you’ve got a problem with the tax man, we offer a free consultation to talk things through.

Call now on 0800 902 0123 if you want to raise finance to manage a HMRC debt



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