HMRC TAX ARREARS

If you have built up arrears with HMRC, it is important that you understand what your options are. We can guide you through the processes involved and help make things more manageable.

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What to Do if You Have HMRC Arrears

Should you find yourself with HMRC tax arrears, it is imperative that you act quickly. Burying your head in the sand will do nothing but allow the situation to escalate out of your control, and possibly lead to action such as a winding up petition. You may be able to avoid all of this if you contact them first.

When it comes to HMRC tax arrears, it is likely that you have outstanding obligations with one of these three liabilities.

Corporation Tax: This levy is paid on all taxable profits made by UK companies. When it comes to the calculations of a firm’s corporation tax, the onus is on the business to make sure all returns are accurate and filed/paid on time.
Value Added Tax (VAT): A tax that must be paid by all businesses whose income exceeds the £83,000 VAT threshold. It is charged on the sale of all goods and services by UK businesses at a standard rate of 20% and must be paid quarterly
Pay As You Earn (PAYE): The system used by HMRC to collect corporations Income Tax and National Insurance Contributions from a business’ employees. The employer must remove the required amount from workers’ wages and pay it directly to HMRC.

If you have started to build up HMRC tax arrears that you cannot afford, you should first of all ensure that you completely understand your financial situation and where the arrears stem from. Does the owed figure seem correct? Mistakes at the tax office are rare, but they do happen. If you feel that the amount owed is incorrect, it may be possible for you to dispute the debt. It is important that you take any necessary appeal action before you enter into any form of payment agreement with HMRC. The collection of the disputed debt should be postponed during the appeal process, to take the pressure off, albeit temporary.

Failure to settle HMRC tax arrears could lead to serious financial difficulties. If there is no appeal process underway, and no attempt to contact the tax office regarding the arrears to negotiate some form of payment plan, then HMRC are likely to take some form of enforcement action against you. This could be court bailiff action, or even liquidation that can result in the forced closure of your company.

Regardless of your situation, it is recommended that if you find yourself faced with HMRC tax arrears, you should contact an independent expert as soon as possible to ensure that you are protected, and make sure that you are dealing with your arrears in the best manner possible for the future of your business.

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If you are faced with HMRC tax arrears, you can rely on our specialist team to assist. Get in touch today.

How to Pay HMRC Owed Tax

If you owe money to HMRC, it is important that you are proactive and efficient in your actions. While each business and its situation may vary, it is important that you follow several key steps of paying owed money to the tax office; from assessing the situation and seeking specialist advice, to negotiating with and paying HMRC.

Assess the Situation

Before you do anything, take a step back. Assess your situation, make sure everything adds up, and ensure that you are not making a mistake. Mistakes at HMRC are not made often, but they have been known to happen. It is vital that you analyse your finances, check the amount you are expected to pay, and make sure that you agree with the tax office’s assessment.

Seek a Specialist

We understand that if you have HMRC tax arrears, you may find it to be a difficult step to reach out and ask for assistance from anybody. However, seeking professional advice could be key in allowing you some much-needed time to think, and allow you to better focus your attention on doing what you do best, running your company.

An expert advisor will be able to act as a buffer between you and the tax office, while also being capable of negotiating with HMRC on your behalf, to use their expertise and skills to help steer you out of tax debt and back to how you want to be operating.

Negotiate

If you have assessed your situation and found that you are not going to be able to repay your HMRC arrears in full, it is possible to negotiate with HMRC. Failure to pay tax debt owed on time, without informing them of your inability to pay can result in a tricky situation getting out of hand, and can even lead to the liquidation of your business if you’re not careful.

This is why it is so important that you reach out to the tax office as soon as possible once you realise your inability to pay on time. Due to increased pressure placed upon them by The Treasury, HMRC are now forced to put negotiating businesses under further scrutiny than before, but it is important that you are not put off. HMRC are open to helping a struggling business if the situation requires it.

When it comes to negotiating with HMRC, there are a few important things to consider that can go a long way towards increasing your chances of success. These include:

Be proactive: Make sure you take as active a role in the negotiations as possible. Show that you are a business who aims to get out of this financial hole as soon as possible, and that you are willing to work with HMRC to do so.
Remain honest: Be upfront about your finances. Any attempt to hide the realities of your situation, or to stretch the truth regarding how much you can afford to repay will be futile. HMRC have negotiated with businesses in your situation countless times and know what to look for, and there is no point agreeing to a deal you won’t be able to afford because you weren’t honest in your correspondence.
Be clear: Before you pick up the phone, it is important that you know exactly what you plan to see. You should be absolutely clear about how much you owe, what reasoning you have for your arrears, and what plans you have in place to correct the arrears.

Pay HMRC

Once an agreement for the repayment of your HMRC tax arrears has been made, it is important that you do not lapse on these payments. A failure to comply with an agreement could lead to court bailiff action, and ultimately can result in liquidation of your business. There are a few ways you can go about actually paying your tax bill:

Direct Debit: Likely the most simple, and preferred method of debt repayment today. You can set up a direct debit to go out of your account on, or before your deadline.
Online: You can pay via HMRC’s dedicated online payment system. To do so you will need your Unique Tax Reference code, and the exact amount owed in that payment must be paid in full from one verified card.
Cheque: Paying your tax bill by cheque was once the standard. Despite the technological advancements, a cheque made out to ‘Her Majesty’s Revenue & Customs only’ will still suffice today. It is important to note that if you wish to pay off your HMRC tax arrears by cheque, the date of receipt will be the date the bill is paid, so you should make sure you leave plenty of time to account for postage when facing a tight deadline.
Bank: Equally, it is still possible to pay your tax bill over the counter in a bank. Take in a statement from HMRC detailing the amount owed, then follow all of the necessary steps in-branch. This may be a better option compared to paying by cheque for a strict deadline.

Should you find yourself in the position of not being able to comply with your deal with HMRC for any reason, you may be able to contact them again to re-negotiate your terms. Speak to an expert to find out where you stand, and what options may be open to you.

How Inquesta can Help if You Owe Money to HMRC

If your business is faced with financial difficulties, no matter the severity, or their causes, it is important that you get in touch with a specialist that you can trust. Inquesta have a skilled team with all of the expertise you could need to fight your corner and help you turn your business back around.

We place the interests of our clients at the forefront of everything that we do, to ensure that their needs always come first. This is how we provide a personal service that guarantees results. We have experience guiding businesses of all shapes and sizes through repayments to the tax office, so we are perfectly assisted to support you.

You can be assured that with Inquesta’s tax debt solution service, you are working with a provider that you can trust. Contact us today.

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Our Specialist Team

Inquesta’s dedicated team has decades of experience working closely with businesses faced with HMRC arrears. We have seen everything and know exactly how stressful a situation it can be, and what you need to do.

Steven Wiseglass

Director of Insolvency

A co-founder of Inquesta, Steven is a licensed Insolvency Practitioner with over a decade of experience in the field. He is a member of the Insolvency Practitioners Association, Association of Business Recovery Professionals (R3), and his insolvency licence is issued by the Insolvency Practitioners Association. In addition, he sits on the R3 committees of the North West Regional Committee.

Steven specialises in advising directors of small to medium-sized businesses, and has a wealth of expertise in providing the most appropriate advice whatever the firm’s circumstances may be. He has also been instrumental in helping company directors save their business and rebuild them into successful enterprises.

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Steven Mason

Insolvency Practitioner

A licensed Insolvency Practitioner, Steven specialises in advising directors of small and medium-sized businesses on their options when faced with financial problems. These include liquidations, administrations, and company closures.

Martin Willock

Insolvency Advisor

Martin specialises in advising directors on matters involving corporate insolvency.

FAQs

What Happens if You Owe HMRC Money?

In most cases, if you owe HMRC money they will attempt to reach out and contact you to discuss your situation, to find a solution that benefits both parties. Some options HMRC may agree to are:

A Time to Pay payment plan
Overpaid taxes that would be repaid may be used to clear owed taxes
Tax code may be adjusted if you receive PAYE income.

It is important that you respond to any correspondence from HMRC as quickly as possible to make it clear that you are not refusing to pay what you owe.

Can You Go Bankrupt if You Owe HMRC Money?

Should you find yourself in the position of owing significant sums of money to HMRC, it is possible that you could be made bankrupt if they do not believe that you will be able to repay. In this scenario you would lose your business, your home, and any other assets necessary to repay your accrued debt.

This is why negotiating with the tax office is so important. Failing to work with them will only see your problems mount up, and could result in you having to pay court fees and HMRC costs on top of your original arrears.

How Do I Find Out How Much I Owe HMRC?

It is possible for any taxpayer to access the amount they owe via HMRC’s online services. This site will provide you with a sum of the payments you are required to make in both January and July, as well as giving you access to data on all of the historical payments made on your account.

Can I Spread Tax I Owe to HMRC Over Time?

A Time to Pay agreement is a method of allowing a party to spread their repayments over 12 months. You can set up your own Time to Pay self assessment plan online, without needing to contact HMRC directly if you:

Owe up to £30,000
Have no other outstanding tax debts or returns
Have no other payment plans in place with HMRC
Set up the plan no later than 60 days after the payment deadline

How Many Years Can HMRC Claim Arrears?

How far back HMRC can claim arrears will depend on the suspected severity of your case. Typically, arrears due to simple mistakes can be investigated up to four years, cases of believed carelessness can be investigated up to six years, and investigations into suspected deliberate evasion of tax can go back up to 20 years.

Can You Close a Company if You Owe HMRC Money?

You can. However, there are strict guidelines you must follow. A failure to do so can result in severe consequences. Liquidation options open to you should you find yourself drowning under severe tax debt include; Creditors Voluntary Liquidation (CVL), Compulsory Liquidation, and more. Should you wish to follow this course of action, it is highly recommended you contact a specialist.