Why HMRC is different

A supplier weighs up whether chasing you is worth the cost. HMRC does not work that way. Interest runs from the due date, penalties escalate on a schedule, and once enforcement starts it largely runs itself.

HMRC also ranks ahead of most other creditors in an insolvency for VAT, PAYE, employee National Insurance and CIS — the taxes the company collected on someone else’s behalf. That changes the arithmetic of every option and it is worth knowing before you choose one.

What arrears usually consist of

• VAT — unpaid returns, assessments raised where returns were not filed, surcharges and penalties
• PAYE and National Insurance — submissions filed but not paid
• Corporation tax — unpaid liabilities, determinations where no return was filed, and charges on overdrawn director’s loan accounts
• CIS — deductions taken from subcontractors and not paid over

File the returns. It is the best thing you can do.

Where returns are outstanding, HMRC estimates the liability itself — and those estimates are usually higher than the real figure. They stand until a proper return replaces them.

You also cannot negotiate anything on a debt nobody has quantified. An unfiled return removes any credibility from the conversation before it starts. Getting the filings current is the first thing we do, and it frequently reduces the debt on its own.

Time to Pay

HMRC will consider spreading arrears where the company can show it cannot pay now but can pay over a defined period. Proposals work when the returns are up to date, the numbers are realistic and current liabilities keep being paid. They fail when the forecast is optimistic.

A lapsed arrangement is much harder to reinstate than the original was to get, so it is worth proposing something you can actually meet.

Where a sale fits

Where the arrears genuinely cannot be serviced from trading and Time to Pay is not realistic, selling the company may be an option. The liability stays with the company; ownership changes. We would want to see the correspondence, the filing position and the creditor schedule.

If HMRC has already petitioned, that route has usually closed. See Compulsory liquidation and winding-up petitions.

What we can do either way

Bringing the filings current, replacing estimated assessments with real figures, reviewing penalties, and putting a Time to Pay proposal together is work we do whether or not a sale ever happens. See Tax & Statutory Compliance.