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Struggling To Pay HMRC Debts?

Date Added: 22/02/2016  

At 4R Business Recovery, we help to rescue businesses that are in financial difficulties, working with them to turn their fortunes around. One of the more common occurrences of a financial difficulty is when a business is struggling to pay monies owed to HMRC – PAYE, NIC, VAT and Corporation Tax.
This article looks at how we can help businesses who find themselves in this situation, and suggests that the quicker action is taken the easier the problem is to deal with. The longer a problem is left, the worse the likely outcome, with director disqualification being possible if a company has been trading to the detriment of HMRC.
Take Advice Quickly If You Are Struggling to Pay HMRC Debt
If you are struggling to pay what you owe HMRC, our best advice is to take swift action. If the problem is just a short term one, caused by a temporary cash flow problem, for example, then contacting HMRC to ask for a Time to Pay Arrangement is a good starting point. This can result in an agreement to pay what you owe over a period of 6 months or so, although HMRC rarely agrees to more than 12 months to pay off arrears.
Businesses are legally obliged to pay ‘crown debt’ (as it is called) to HMRC, and it is by no means certain that they will agree to a Time to Pay Arrangement when you call them. So be prepared for them to challenge your reasons and figures. If you need help in your preparation, talk to us. We know how they work and what they want. If necessary, we can help you prepare a professional proposal backed by a cash flow report and a paying back schedule that your business can afford.
What Happens If the Debt Problem is More Serious and Longer Term?
Non payment of HMRC debt can end up with your company being wound up. HMRC is responsible for more Winding Up Petitions than almost all other organisations put together. If your indebtedness to them is more serious and longer term than can be resolved by a Time to Pay Arrangement, then are unlikely to take a series of escalating steps to recover the debt:
-          A threat of legal action
-          County Court Action
-          Bailiff Action
-          Seizure of Assets
-          Statutory Demand
-          Winding Up Order
As Turnaround Consultants, we understand the stress that businesses (and directors/owners) are under when they cannot pay their debts, and we also know that inability to pay taxes is likely to be a symptom of a more serious cause. Our aim is to work with you to get you through your problems and then turn your business around. This might require action to protect you and your business, with Voluntary Arrangements, Administrations Orders and Liquidations all being possible options.
Once again, the quicker you act, the more we can do to help.
What About Possible Director Disqualification?
The possibility of director disqualification can arise when ‘Trading to the Detriment of HMRC’ has taken place. This usually means that other creditors have been paid, as well as the directors of the company, but not HMRC. In other words, the monies due to HMRC are being used by the company to fund its on-going trading. Recent experience suggests that if companies do not pay their taxes, and insolvent liquidation is the result, then the directors of limited companies cannot be certain of the protection of limited liability, with director disqualification being a possible result.
We are seeing more and more director disqualifications for trading to the Detriment of HMRC, with the Insolvency Service stating that it “will rigorously pursue traders who seek an unfair advantage over their competitors by not paying VAT or PAYE to the Government.
Under these more extreme circumstances, we will work with you to help you and your business get back on track as quickly as possible, calling on the expert advice of Director Disqualification Solicitors as required, to help avoid or reduce director disqualification. 

When it comes to difficulties in paying HMRC Debt we are experienced in providing the right advice to you and your business to turn things around: from helping with Time to Pay Arrangements right up to helping you deal with the threat of Director Disqualification.

If your business is struggling to pay HMRC debt, Contact us now or call us on 0800 902 0123 for a free initial discussion.


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