If you owe tax and are unable to pay HMRC, you need to contact the HMRC Debt Management and Banking Department (DMB) immediately to try and set up an affordable tax payment plan.
Before contacting HM Revenue & Customs, it is always advisable to speak to an expert advisor who understands how HMRC’s ‘time to pay’ process works and has experience dealing with companies in your position.
HMRC has an entire Debt Management and Banking Department (DMB), and someone who understands the way they think, and how to approach them, will be beneficial. Over the last 12 months, we’ve negotiated over £2,000,000 with HMRC and are amongst the UK’s most experienced HMRC mediators.
How to Contact HMRC Debt Management?
The HMRC Debt Management helpline phone number is 0300 200 3887.
8am to 8pm, Monday to Friday.
HMRC also have ‘Agent Dedicated Lines’, for those who wish to discuss PAYE, Self Assessment, VAT or tax credit queries and are authorised as either a tax agent, or a tax adviser for their clients. You can find out more by clicking here.
Could an Individual Voluntary Arrangement (IVA) Help my situation?
If you’re finding that your tax debts, such as self assessment, have become unmanageable, you may be able to arrange an Individual Voluntary Arrangement (IVA), a formal agreement between you and your creditors which gives you time to pay back your debts over an agreed time period.
As the largest creditor in the UK, IVA’s are something HMRC will accept but they have their own guidelines about the circumstances in which they’ll accept this. Usually covering a period of 60-72 months, you’ll need an Insolvency Practitioner to set an IVA in motion, who can work with you to put together a proposal for consideration by HMRC.
What about a ‘Time to Pay’ Arrangement?
Another way to pay the whole amount demanded is known as a ‘Time to Pay’ Arrangement. These are monthly instalments, typically over a period of 12 months. As well as making these payments, all other taxes must be paid when they are due or the HMRC time to pay arrangement will go into default.
If there is a default during this time, HMRC is likely to lose confidence in the company’s ability to make future payments, and this will severely dent your chances of reaching a further agreement to settle the debt. For this reason, it is essential you take time and seek advice when proposing the initial arrangement to ensure the monthly payments are an amount you can realistically afford.
Should I Consider Debt Consolidation?
Debt consolidation generally means taking out a new loan to cover your existing debts, therefore simplifying your repayment process. It helps to reduce interest on debts but it needs to be done strategically and with a clear understanding of the fine print of both your new and existing loans, to avoid making your situation worse.
Should I Arrange a Debt Management Plan?
A debt management plan is a formal arrangement between you and your creditors so that you can pay off your debts.They are less protective than Individual Voluntary Arrangements, for examples, because creditors can still take legal action during this process.
Would a Debt Relief Order be Appropriate (DRO)?
A low-cost alternative to bankruptcy, a debt relief order (DRO) can be appropriate but only for individuals with few assets and minimal debt – they’re not applicable to companies. If you live in either England or Wales, and have less than £20,000 in debt, and £1000 in assets, a DRO freezes any interest and repayments for 12 months, and after that period your debts will be written off.
HMRC Vat Debt
We are specialists at helping companies with outstanding VAT payments to HMRC which they can’t meet. If you’re late with your VAT and in arrears, we would suggest you contact us as soon as possible to avoid any escalation of your situation.
What if an Agreement Can’t be Reached?
If you are an unable to reach an agreement, then the debt management department are likely to ask you some questions about your personal finance situation to determine whether you can’t settle the debt, or simply won’t settle the debt.
They will want to satisfy themselves that you are making an honest attempt to clear the debt and are not withholding funds for other things. A debt management officer will be appointed to handle your case and will challenge any expenditure that seems to be unnecessary.
HMRC’s Field Force Enforcement Unit
If HMRC decides that an agreement to pay the tax debt cannot be reached, or you ignore the debt entirely, HMRC will take ‘enforcement action’ to collect the money. This could be in the form of:
- Collecting the tax you owe through your earnings or pension
- Asking a debt collection agency to collect the tax
- Removing and selling possessions to recover the loss
- Taking money directly from a bank or building society account
- Taking you to court
- Closing down your business
Clearly, you must do everything you can to avoid enforcement action. That starts by contacting HMRC as soon as payment has been missed, or before the payment deadline if you know you’re going to be unable to pay. Enforcement action costs HMRC money, so it will be avoided if HMRC feels it has a realistic chance of collecting the debt due. Many company directors feel anxious about talking to HMRC about tax, but delaying the call in the hope that things will improve is likely to make matters worse.
If you have any questions at all about your best course of action when dealing with the DMB, please do use our live chat, or pick up the telephone. We offer a free, confidential phone call to anyone struggling with company debt, and have particular experience with HMRC and tax arrears. Call 08000 746 757 now.