HMRC debts – finding solutions
When a business has cash flow problems, directors by necessity often divert cash from the money owed to Her Majesty’s Revenue and Customs (HMRC) into essential stock or overheads.
HMRC take a dim view of this practice but it is understandable:
many businesses are struggling to survive and make the day-to-day debts a priority over HMRC debts.
In addition, while the annual accounts may show a taxable paper profit, creating a corporation tax liability, by the time HMRC debt is due, the business may not have the cash flow to make the payment to HMRC
HMRC may remain patient and, depending on your normal tax profile, the HMRC debt may be allowed to operate for twelve or 18 months without recovery action.
There seems no hard or fast rule about when HMRC will begin to chase HMRC debts. Sometimes bailiffs start calling when a single month is missed, while other businesses trade without paying HMRC for over 24 months.
At some point, however, HMRC will start chasing for payment on HMRC debts.
What to do when you can’t pay HMRC
In 2005, Inland Revenue (which operated PAYE, Self Assessment, and Corporation Tax) and HM Customs and Excise (which was responsible for VAT and Duty) were merged into one organisation, Her Majesty’s Revenue and Customs.
This new department has enhanced powers and is modernising to ensure the effective collection of tax revenues. HMRC debts are being collated and HMRC regularly takes action to collect money that is owed.
Business owners should know that HMRCcan take action regarding HMRC debts without a court order by using a walking possession order. This allows HMRC to take stock and equipment from your premises. If that fails, they may turn to your personal possessions, unless the HMRC debt is owed by a limited company.
If the walking possession order is ineffective then HMRC will issue a winding up petition. If this happens and the outstanding HMRC debt is not paid quickly, the bank will freeze your accounts until the order is lifted or indeed the winding up of the business is ordered.
The best way to deal with a walking possession order or a winding up petition from Her HMRC IS TO CONTACT US IMMEDIATELY . We can help you find solutions to your HMRC debts.
Setting up a time to pay arrangement with HMRC
Traditionally, if you wished to continue business, HMRC would not give any longer than three or six months to pay outstanding HMRC debts.
Due to the recent credit crunch, HMRC ave been encouraged to provide time to pay arrangements – agreements that allow HMRC debts to be paid over time. These are still available, but under review by HMRC as many of the arrangements are failing.
For companies that intend to cease trading or if the turnover is less than the deregistration limit, it is important to inform HMRC and apply to deregister. This will stop you from incurring future HMRC debts, making it easier to come to an arrangement to pay HMRC
Remember, HMRCintention is to:
• Collect the HMRC debts that are due
• Ensure that you are not building new HMRC debts that you may also default on
• Eliminate fraud and tax evasion
HMRC will not tolerate businesses continuing to accrue tax arrears without a payment plan and will often commence bankruptcy proceedings even if you have no assets, with a view to stopping you trading altogether.
If you need a time to pay arrangement from HMRC contact US to discuss your options. We can also provide assistance if you cannot afford pay your HMRC debts, or if you are in default of a time to pay arrangement.
– The solution to your HMRC debts
WE can assist you in managing your outstanding HMRC debts as well as other financial liabilities, giving you complete peace of mind.
To find out about how our specialists can assist you with HMRC debts or how an insolvency solution from US can help your business,contact us. We’ll be happy to discuss your requirements and provide a free consultation about your HMRC debts.
we work with clients to help them save their business from HMRC debt and start making a profit. Where a company cannot be saved; we will offer business insolvency advice and arrange the right solution for your business, working to ensure that the stakeholders are sheltered from personal loss.
The Venture Consulting Team