20+ Years Experience
Specialist Business Insolvency Company
You have the option of contacting the HMRC Debt Management and Banking Department to try and set up an affordable tax payment plan if you owe tax but are unable to pay HMRC.
Before contacting HM Revenue & Customs, it is always a good idea to talk to an expert advisor who is familiar with HMRC’s “time to pay” process and has worked with businesses in your situation before. A specialist can help if you owe HMRC VAT, the most common business debt, or other business tax.
We are among the most experienced HMRC mediators in the UK. In the past 12 months, we’ve helped clients reach debt management agreements worth more than £2,000,000.00.
His Majesty’s Revenue and Customs (HMRC) takes care of debts related to National Insurance, Income Tax, Tax Credit Overpayments, and VAT arrears. It is best to try and settle any of these “priority” debts as soon as possible.
If you need to establish a tax payment plan because you owe tax but cannot pay HMRC, get in touch with the specialised department.
They can tell you how to get in touch with HMRC’s Enforcement Department, which is the main department in charge of collecting taxes.
Call the HMRC debt management helpline at 0300 200 3887, Monday through Friday, 8 a.m. to 8 p.m.
If you know you can’t pay the tax bill in full by the due date, call the Business Payment Support Service at (800) 200-3835, which is available 8 a.m. to 8 p.m., Monday through Friday, and 8 a.m. to 4 p.m., Saturday.
There is an agent dedicated line for people authorised to act as tax agents or advisers for clients who have questions about PAYE, VAT, self-assessment, or tax credit. View additional details here.
When you are behind on paying your taxes, either because you paid late or because you haven’t paid yet, it is the job of the HMRC debt management section to send you letters to remind you and try to get you to pay. You could face legal action if you don’t pay.
This is only the first stage. There will be a quick succession of letters, fines, and enforcement proceedings. It is a crucial duty for individuals working in this division.
The letter from HMRC addresses the following:
Watch out for debt management letters that fraudsters not affiliated with HMRC can send.
Pay attention to a website URL and phone number that are valid and match those on the www.gov.uk website. All HMRC hotline numbers will start with the prefix 0300. Make sure there are no requests for bank information and proper grammar.
One thing is sure. Nobody is perfect and always in the right. Even HMRC is susceptible to calculating mistakes.
Be careful not to take the calculation at face value because it comes from a large government organisation. Always verify and go back through records to ensure your debt is accurate.
When contacting HMRC, you must be ready and have the relevant information. Such details consist of:
If you can’t pay a VAT, PAYE, or Corporation Tax bill right away, you might be able to work something out with HMRC as long as they don’t find any signs of wrongdoing.
HMRC may be open to negotiating a “Time to Pay” arrangement with you if you haven’t already done so. That’s a structured way to pay back your debt; you’ll have to do it over 12 monthly payments.
You will be required to pay all outstanding tax obligations as they become due during that time.
The Time to Pay arrangement will default if you agree to one with HMRC but fail to pay an instalment on time or other taxes when they are due. That will seriously undermine HMRC’s faith in your ability to make future payments, and you might not be able to come to another settlement deal.
You should get help from a professional and take the time to come up with a first payment plan that you know you can afford.
If you’ve never had a Time to Pay arrangement before, HMRC will be more willing to work with you because its rules are usually pretty strict.
The degree to which HMRC is confident in your capacity to make the payments will be a significant factor. They will also look at your history of compliance, your industry, and the promptness of your communication (i.e., whether you got in touch right away or waited for enforcement action to start) will also be taken into account.
HMRC is not in the business of shutting down successful companies if it can avoid doing so. Let’s say it’s clear that your business is having a hard time, and there haven’t been any late or missed payments. In that case, HMRC will probably be amenable to discussion.
Before considering Time to Pay arrangements, HMRC will want to ensure that your company can’t pay its tax arrears in full and isn’t just choosing not to.
A debt management officer will be assigned to your case to look closely at your company’s financial status if the IRS feels you can pay the tax bill but are choosing to withhold the money for other purposes.
Your business is considered “insolvent” if HMRC doesn’t give you a Time to Pay plan or if your situation changes and you can’t make the payments.
A formal insolvency procedure might be more appropriate in that situation.
HMRC may even issue a personal liability notice to hold you personally accountable for the tax debt if you decide to ignore them and stick your head in the sand. It could also make a statutory demand, leading to a winding-up petition that shuts down your business if you don’t pay your debt.
If you are being chased by a debt collection agency and owe HMRC tax debts and other taxes, you need to take action.
Get in touch today for free advice on a repayment plan for tax arrears as well as other debts.
Many company directors feel anxious when debt collection agencies start to threaten court action, but many debt solutions are available.
An IVA is a formal arrangement between you and your creditors that lets you pay back your debts over time.
HMRC accepts IVAs, but they often have rules about the conditions under which they’ll do so.
Speak to an insolvency professional today who can assist you in putting together a proposal for HMRC to consider.
Time to Pay arrangements are monthly payments spread out over a year.
Please be advised that this agreement will default if any other taxes are not paid when they are due.
Missed payments mean HMRC would probably doubt the company’s ability to make future payments, ending any hope of coming to another agreement to settle the debt.
If you want to make sure you can realistically afford a plan like this, we suggest you seek professional advice.
Debt consolidation refers to taking a new loan to pay off existing debts. Debt consolidation makes it easier to pay back your loans and lowers the interest rates on any loans you still owe.
It could worsen the issue if this is done without a complete understanding of the tiny print of all the loans involved. It would help if you strategically analysed this option
You and your creditors reach a formal agreement to settle your debts. Unlike an IVA, creditors can still take legal action during this process.
A DRO is a low-cost alternative to bankruptcy. However, this is only for individuals living in England or Wales with a few assets (£1000 maximum worth) and little debt (less than £20,000).
The debt-relief order freezes any interest and repayments for 12 months, and debts will be written off after that period.
These days, it’s possible for businesses that are in a poor financial situation to raise a surprising amount of finance by using their assets as security.
Assets such as stock, equipment, company vehicles, property, and even unpaid invoices can all be used as security for funding.
For example, if you can’t pay a tax bill on time because of a temporary lack of cash flow, invoice finance, which lets you get the money stuck in unpaid invoices, could give you a short-term cash boost.
Alternatively, asset-based loans could provide the funding you need to repay your creditors and get back on track if the business requires capital over the long term.
Even if you already have asset-based lending or invoice finance, it may be possible to restructure your business’s secured lending to free up the funds you need to settle a tax debt.
If no agreement is made, the HMRC debt management department will likely ask you some questions about your personal financial situation to see if you can settle the debt or not.
They must be satisfied that you are being honest in attempting to pay the debt and are not withholding funds for other things non-related.
A debt management officer will be appointed to handle your case, and it is their job to challenge any expenditure they see as unnecessary.
If an agreement cannot be reached and/or the debt is ignored completely, HMRC will take enforcement action to collect the money owed.
When you cannot pay, you must act quickly.
In the end, it is a warning sign that could lead to bankruptcy based on the insolvency test criteria.
Speak with a licensed insolvency practitioner today. We have years of dealing with HMRC, particularly in proposing realistic TTPs.
Propose a company voluntary arrangement (CVA) to HMRC. A CVA is a proposal to restructure the debt, for example, paying monthly repayments to creditors over an agreed period of 3-5 years. In this scenario, some of the debt may be written off.
Seek funding from elsewhere, i.e. invoice finance, bank loan, sales of assets
Place your company into administration. In doing this, you cease any legal action, being protected by a moratorium, whilst you work with an insolvency practitioner to plan the next steps, which may involve a CVA or voluntary liquidation”
Place your company into a Creditors Voluntary Liquidation. This will allow no chance of rescue – it means the end for your company. Under this procedure, you simply follow the steps and have assistance in shutting your company down.
So, all in all, do your best to avoid enforcement action and contact HMRC as soon as payment has been missed or in advance of the payment deadline if you know you cannot pay. Delaying these sorts of priority payments will only make the problem worse.
Contact our team of experts today if you have any questions or need help with how to deal with unpaid bills to HMRC and the options you have.
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