Her Majesty’s Revenue and Customs (HMRC) is one of the largest creditors in the UK. If your business is struggling to meet its tax obligations in full, such as PAYE, VAT and Corporation Tax, your business can incur fines and legal action which could result in your company being wound up.
There are recognised legal procedures and ways of dealing with HMRC that can save your company from its tax debts.
The key to success is acting quickly and seeking the advice of an experienced insolvency expert at the moment that you realise that your business is struggling to pay its taxes
If you do nothing and wait for HMRC to contact you chasing payment, this will work against you. It will become more difficult to negotiate with the tax office for more time. HMRC could resort to sending Enforcement Officers to take your business assets as payment, and your company could eventually be forced into compulsory.
A Time To Pay Arrangement is an agreement that can be negotiated with HMRC which allows businesses that are struggling with their cash flow, but are still fundamentally solvent, extra time to pay their business taxes. We can look into your case, assess your finances and produce cash flow projections in order to build a case for a Time To Pay Arrangement for your company.
Due to our experience and our excellent relationship with HMRC, we can negotiate a Time To Pay Arrangement on your behalf. If approved, your business could be given a number of months, up to one year or even longer, to pay its tax liabilities via regular monthly payments. Due to COVID-19 we have seen more forgiveness from HMRC with the amount of time increasing.
There are a number of business finance options available that can help to release funds tied up in assets in order to pay business taxes on time. For example, Invoice Factoring allows you to release funds tied up in lengthy invoice payment terms; whilst asset financing allows you to raise funds against the value of company assets, such as machinery and property. We can assess your business finances and determine the best course of action based on your individual situation.
A company voluntary arrangement (CVA) is an agreement that an Insolvency Practitioner negotiates between your company and its creditors (including HMRC) that allows your company to pay all or part of its debt off over a period of time. CVAs lead to relief from HMRC pressure, lower monthly payments and a centralised payment, which improves cash flow and allows your company to work its way out of its debt problems.
Administration could be the best possible option for rescuing the business if it looks as though HMRC are moving to wind up your company. Administration is an insolvency procedure whereby your appointed insolvency practitioner, would take control of the company and serve as the administrator. Our role would be to take actions which result in the recovery of the company and the payment of HMRC debts. This could be via a continuation of trading, a sale of assets, a company restructure, or a sale of all or part of the company to a new owner.
If it is determined that the recovery of the business is unlikely and we don’t think that the company will be able to pay its tax debts to HMRC; we may determine that a pre-pack administration sale of the business if the best course of action. Pre-Pack Administration is a formal insolvency procedure where we arrange the sale of an insolvent business and its assets prior to the company being put into administration. Then, once the company is put into formal administration, the business and its assets are immediately sold generally to a connected party. This process provides a seamless transfer of the business and its assets so that trading can continue, contracts can be upheld, jobs can be protected and the business can be saved. Current directors of the company can purchase the business and its assets under a newly established company.
As experienced insolvency experts, we have years of experience in dealing with HMRC and working with companies to guide them through to solutions for their tax debt problems. We can assess your case, wherever you are in the country, advise you on your options and guide your company through any insolvency, legal or negotiation process to come to a solution.
The key is to act fast and contact us as soon as you notice that there may be a problem with being able to meet your business tax obligations on time. Take a look at our website for further information on the topics discussed above. Or you can contact us at any time via telephone, email or fill out our contact us form for more information, advice or guidance.