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HMRC Business Debt

HMRC are one of the most aggressive and difficult business creditors. Find out how to manage your HMRC arrears and protect your business.

When a business struggles, often tax liabilities such as PAYE, VAT and corporation tax can be neglected as they do not need to be paid immediately. However, when liabilities are due, they can often become the death knell for your business. Unfortunately, His Majesty’s Revenue and Customs (HMRC) are particularly aggressive as creditors.

This is what makes any HMRC liabilities ‘priority debts’. Depending on your conduct, you can even face legal penalties or be made personally liable for business debts.

However, there are options available if your business is struggling with HMRC liabilities. Increasingly, businesses are turning to borrowing as a short-term solution to HMRC arrears. This is the worst option available and will only serve to put your business into more unmanageable debt. A professional insolvency expert can help you control your tax arrears and keep your business running. Or, close your business in a controlled manner.

You Can’t Negotiate With HMRC

What makes HMRC different (and more difficult) than most creditors is that they don’t work for profit and therefore the ‘commercial’ aspect does not factor into their decision-making process.

As a result, they are much less likely to accept payment plans or reduced settlements. They are also far more likely to begin legal action and issue winding up petitions for companies.

So, it may be tempting to hold off on facing your HMRC liabilities. However, this could spell disaster for you and your business. As well as this, the longer you wait, the more penalties and fees you will incur, ultimately increasing the amount that you owe. Some of the most common and ‘dangerous’ HMRC debts include:

  • Corporation Tax
  • National Insurance Contributions
  • Construction Industry Scheme deductions
  • PAYE
  • VAT
  • Income Tax

These liabilities can quickly pile up and may create a situation in which you have no way out other than formal insolvency procedures.

How Can HMRC Recover Debts?

HMRC can take the same action as any other creditor but, they are also granted additional legal powers to assist them in the recovery process. As mentioned, they are particularly aggressive so will not ‘hold back’ when it comes to recovering money owed. Some of the ways they do this include:

  • County Court Judgements & Statutory Demands – Although slightly different, both of these are formal requests for payment and the precursor to forcing the liquidation of your business.
  • Winding-up petition – This is a petition issued for the closure of your business. If you do not respond, a liquidator will be appointed, the assets sold and your conduct investigated.
  • Distraint/Asset Repossession – HMRC can send bailiffs to repossess your company’s assets and sell them to pay your debt.
  • Collection agencies – HMRC employ a number of very persistent debt collection companies to pursue debts on their behalf.
  • Penalties – To deter non-compliance, HMRC has the ability to add late penalties and charges to your existing arrears. This can add a hefty sum to your liabilities.

Rory McGimpsey

Head of Corporate Debt Solutions

10/10 Experience and Result

I would like to thank Rory and the team for an excellent service and a first class result, a result that was much better than expected. Having Bell and Company on board has lifted all the stress and let me…

10/10 Experience and Result

I would like to thank Rory and the team for an excellent service and a first class result, a result that was much better than expected. Having Bell and Company on board has lifted all the stress and let me move on with running my business. Couldn’t recommend highly enough.

Mr Graham – GB

No Negotiation So, What Are The Options?

HMRC can be a difficult creditor to negotiate with. Further to this, HMRC debts are often combined with other liabilities which can make the situation even more complicated. It is important that you get the best advice before you act. As with all debt issues, you need to consider your entire situation before making hasty and potentially wrong decisions with them.

Whilst HMRC can be receptive and assist in terms of payment programmes etc, they do not and will not waste time with what they sometimes refer to as ‘serial offenders’. Ultimately, HMRC can be open to payment agreements and other options HMRC are not motivated by money; this makes them less receptive to negotiations.

However, Bell & Company have over a decade’s experience negotiating with HMRC for both individuals and businesses. This gives us the ability to get deals that would not be possible otherwise Contact us today to speak to an advisor and find out your options today. You can call us on 0330 159 5820 or use the Live Chat below to speak to one of the team.

Contact us today to speak to a business debt specialist.

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