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HMRC Arrears

Has your business fallen behind on its tax payments? Whether you have outstanding VAT, PAYE or NIC taxes, HM Revenue & Customs will quickly alert your business and take action if you are in arrears (debt that is overdue when payments have been missed) when it comes to tax.

HM Revenue & Customs is the largest creditor for many businesses so it takes swift action to recover funds owed when your business falls behind on its tax payments.

HMRC deals with thousands of arrears cases every month, and is extremely capable of retrieving money that it’s owed. Because of this, it’s important that you take any HMRC arrears seriously as a company director.

Your business can negotiate with HMRC and work out a tax payment plan – a variety of options, from short-term financing to the Time To Pay programme, are available.


What happens if your business has HMRC arrears?

When your company falls into a cash flow crisis, payments to HMRC can often end up being pushed back in order to pay other creditors. While this can work in the short term, it often leaves your company with HMRC arrears.

HMRC is not required to have a County Court Judgement in order to send your company a payment notice. There is no dispute process – if HMRC notifies your company of a debt, you have a debt.

Paying taxes behind schedule can act as a warning sign for HMRC that your company could soon become insolvent – especially if your company pays taxes late several times or has had payment issues in the past.

If your business has HMRC arrears, it will receive a warning letter from HM Revenue & Customs alerting you to the company’s debt. Often, these warning letters provide just seven days to respond and pay the owed money to HMRC.

Can you be held liable for HMRC arrears?

According to recent estimates, more than 250,000 UK companies have a payment plan with HMRC to clear up debts from unpaid or late taxes.

HM Revenue & Customs is not slow to act, and if one of its demand letters is ignored your company could have a winding up petition issued against it. Around 60% of all winding up petitions in the UK are issued by HMRC against non-paying businesses.

As well as potentially leading to the liquidation of your company, HMRC arrears may also lead to personal liability. If you know your company is insolvent but continue to trade, you could face personal liability for your company’s debts to HMRC.

If your business receives a demand letter from HMRC, it will not wait before attempting to liquidate your business, but a variety of options are available to you.



HMRC Arrears advice

What options does your business have?

Is your business insolvent due to HMRC arrears?

  • HMRC offers a ‘Time To Pay’ plan to viable and solvent companies. This is a way of paying the sum owed to HMRC over a certain time period. If your business has a good compliance record, this could be your best option. However, if your company does not make a payment on time, it will receive another seven-day payment notice from HMRC.
  • Enter a company voluntary arrangement to protect your company from legal action pursued by HMRC and allow your business time to work out a payment plan
  • Enter into administration to protect yourself from legal action from HMRC
  • Raise funds via financing, invoice factoring or another means – in order to pay its debts to HMRC and resume operating.

Learn more about HMRC arrears

Tax arrears are a serious threat to your company, especially if it owes a significant amount to HM Revenue & Customs. Like other threats, choosing the right response can ensure that your company is protected and able to continue trading.

We’ve helped hundreds of UK businesses with HMRC arrears come to an agreement to pay their taxes without affecting cash flow. Contact us now to learn about the options your company has to deal with its HMRC arrears.

Contact us today for FREE to learn more about how we can help you and your business.

We have a team of advisers who have helped hundreds of businesses around the UK that have faced financial pressures on every scale. You are not alone.

Call us free and in confidence on 0800 599 9656 and together we will sort things out.