Help with HMRC Pressure
What Happens If My Business Can’t Pay HMRC?
When your business faces the reality of being unable to pay HMRC, it’s critical to take a series of practical steps to mitigate the situation and seek a resolution. Here’s how to proceed:
1. Document your financial situation: Begin with a thorough review of your business’s finances. Identify exactly how much is owed, to whom, and why. Understanding the specifics of your debt and cash flow situation is essential for formulating a realistic repayment plan.
2. Prioritise HMRC Debts: HMRC debts should be prioritised due to their potential implications, including penalties and legal actions. Recognise that these debts carry significant weight and should be addressed as a priority over other non-critical liabilities.
3. Open Communication with HMRC: Reach out to HMRC at the earliest opportunity. Transparency about your financial difficulties can lead to more sympathetic consideration. HMRC may offer a ‘Time to Pay’ arrangement, allowing you to spread the debt over manageable instalments. This approach demonstrates your willingness to settle the debt and can prevent the situation from escalating.
4. Explore Payment Options: Analyse your finances to determine how much you can realistically afford to pay immediately and over time. This will be crucial in negotiating a payment plan with HMRC that’s sustainable for your business.
5. Seek Professional Advice: This is where Company Debt comes in. Our team of experienced insolvency practitioners and tax advisors can provide expert guidance tailored to your situation. We can help negotiate with HMRC on your behalf, explore all available options including Time to Pay arrangements, and advise on how to manage your finances to avoid similar situations in the future.
What Happens If You Do Not Contact HMRC or Refuse to Pay
If you do not contact HMRC or refuse to pay your taxes, HM Revenue and Customs (HMRC) will initially attempt to reach you through various means, including letters, texts, and personal visits at your home or workplace.
Should these attempts fail and you are unable to agree on an instalment plan, HMRC may take further action to recover the owed taxes. These actions can include:
- Employing a debt collection agency to collect the outstanding amounts.
- Directly deducting the owed money from your wages or any pension payments you receive.
- Seizing and selling your possessions (applicable in England, Wales, or Northern Ireland).
- Withdrawing funds directly from your bank or building society accounts (applicable in England, Wales, or Northern Ireland).
- Taking legal action against you which could lead to court proceedings.
- Declaring you bankrupt if the debt remains unpaid.
- Closing down your company if the unpaid tax is related to business activities.
Before taking any of these actions, HMRC will notify you and provide information about your rights, the potential costs involved, and the options available to you. It’s crucial to respond to HMRC’s attempts to contact you to avoid these severe consequences.
Can HMRC Close My Business?
The short answer is yes, HMRC has the authority to close down a business that fails to meet its tax obligations. However, such action is generally considered a last resort, following a series of steps aimed at recovering unpaid taxes. Understanding the process and knowing how to respond at each stage can significantly reduce the risk of your business being closed by HMRC.
When a business falls behind on its tax payments, HMRC will initially attempt to collect the debt through reminders and demands for payment. If these efforts are ignored, HMRC may escalate its enforcement actions, which can include:
- Issuing a Distraint Order: This allows HMRC to seize company assets to recover the debt.
- Applying for a County Court Judgment (CCJ): This formalises the debt in court and can impact the business’s credit rating.
- Petitioning for Winding Up: As a final measure, HMRC can petition for the company to be wound up, effectively closing the business and using any assets to pay off the debt.
Is It Possible to Write Off My Businesses HMRC Debt?
In situations where the debt is insurmountable and the business is insolvent, formal insolvency proceedings like Company Voluntary Arrangements (CVAs) or liquidation might lead to some debts being written off. A CVA, for example, is an agreement with creditors that allows a company to pay a proportion of its debts over time, with the remainder potentially written off if the CVA is successfully completed.
If a business goes into liquidation, its assets are sold to repay creditors as much as possible. In this scenario, HMRC, as a creditor, may receive only a portion of the owed taxes, or in some cases, none at all, effectively writing off the unpaid debt. However, liquidation means the end of the business, so it’s generally considered a last resort.
Help with HMRC Pressure from Company Debt
Facing HMRC pressure can be an incredibly stressful experience for any business, but you don’t have to navigate this challenge alone. Company Debt offers expert assistance and tailored solutions to help your business manage and potentially overcome HMRC debts.
Our team of experienced professionals understands the intricacies of tax laws and HMRC procedures, and we’re committed to providing practical advice and support tailored to your unique situation. Whether it’s negotiating Time to Pay arrangements, exploring insolvency options, or finding other viable solutions to reduce your tax liabilities, we’re here to help.
Don’t let HMRC pressure put the future of your business at risk. Contact Company Debt today for a confidential consultation, and take the first step towards regaining control of your financial situation.
