My company has tax debts it cannot afford to pay. What can be done?

The most important thing is to take action quickly. Delaying action can put your company in serious trouble and potentially have personal liabilities for you as a director. But don’t worry, there are several possible solutions if you take action before it gets out of hand.

  • Company Voluntary Arrangement – This will help you spread your debts out and mean you only pay what you can afford.
  • Voluntary Liquidation or administration solution – This may protect the company from aggressive legal action by HMRC.
  • Prepack Administration or CVL can allow you to start a new business clear of debts.
  • Request more time to pay the debt – All SMEs with cashflow issues should be able to get a Time to Pay arrangement with HMRC.
  • Introduce more money into the company.
  • We can help you decide which option is best for you, or see if there are any more solutions for your situation.

Does this apply to PAYE/NIC/VAT/Corporation Tax

Yes, it is possible to deal with all kinds of tax debts to HMRC through the solutions above.

What will happen if my HMRC tax debts in arrears are not dealt with?

If your business has tax problems, like arrears of PAYE and VAT then the company is probably insolvent. You must act to do something about these problems. Not paying deductions of PAYE and NIC, VAT or Corporation Tax across to HM Revenue & Customs is not taken lightly by HMRC. If you are unable to pay on time, they will take action to recover the debt – e.g. a bailiff or winding up petition.

HMRC are getting more aggressive as over 250,000 companies are on some form of payment plan and many are failing to keep up with the Time to Pay plan.

Non-payment of tax is a failure to comply with the tax legislation and also signifies publicly (loud and clear to HMRC) that the company is insolvent. You need to act properly and responsibly and deal with this serious threat to your company. With the implementation of Real Time Information reporting to HMRC in April 2013, HMRC will be aware of financial difficulty at a much earlier stage, so early decisive action is crucial.

How can I take action to resolve tax issues?

There are a number of possible solutions for you, but without expert advice, it can be difficult to know which will be the most effective for you. You can call our insolvency practitioners at Lucus Johnson for a free, informal and confidential discussion about your options and which procedure would be most effective for you.