Can’t pay HMRC company tax bill

What should I do if my company owes money to HMRC?

Many companies experiencing financial difficulties owe at least some money to HMRC, whether this is in the form of corporation tax, PAYE, or VAT. While the situation may be common, this does not mean that it is not serious.

As a large non-ministerial government body, HMRC have significant powers, along with huge resources, when it comes to collecting taxes owed by limited companies. While other smaller creditors may take a softer approach to recovering unpaid debts, HMRC often instruct enforcement officers and issue winding up petitions to those limited companies who do not comply.

Despite this, HMRC are surprisingly open to negotiations so long as you are open and honest about your company’s situation. Therefore, if your company finds itself in a position where it cannot pay its tax bills as and when they fall due, communicating with HMRC to understand your options is of paramount importance.

What will HMRC do if I cannot pay my company’s tax bill?

HMRC operate a scheme known as a Time to Pay Arrangement, which allows companies longer to pay their tax arrears and bring their HMRC account up to date.

Time to Pay Arrangements are assessed on a case-by-case basis; however, it is typical that HMRC will give between 3-6 months for a company to clear their tax arrears through a series of monthly repayments.

While HMRC Time to Pay Arrangements can be hugely beneficial for those companies experiencing temporary cash flow problems which has seen them momentarily unable to pay their tax bills, they are not suitable for every company.

Some businesses will simply not have the cash flow required to pay their tax bills to HMRC within the scope of a Time to Pay Arrangement. They may also have other debts and liabilities in addition to HMRC which they are also struggling to pay.

What are my options when I cannot pay HMRC the tax my company owes?

If your company is struggling to pay its VAT, PAYE, or corporation tax to HMRC, this could be indicative of deeper financial problems and cash flow challenges within your company. If you are falling into debt with HMRC – or any other creditor – and are worried about how your company will be able to afford to pay the money it owes, you may need to consider exploring your insolvency options.

Depending on the position of your company, the scale of its HMRC debts, and any other liabilities it may have, it may be possible for the company to be rescued through a formal restructuring process such as company administration or a Company Voluntary Arrangement (CVA).

Alternatively, if the company’s tax arrears, couple with any other debts, has taken the company beyond the point of rescue, it may be that placing the company into a Creditors’ Voluntary Liquidation (CVL) is the best for all parties concerned.

When your company becomes insolvent, you have a legal duty as its director to place the interests of its creditors above those of its directors and shareholders. In practice, this means enlisting the help of a licensed insolvency practitioner to better understand your options.

How can UK Liquidators help when you cannot pay HMRC?

If you have fallen into debt with HMRC and cannot pay your VAT, PAYE, or corporation tax bills as and when they fall due, the experts at UK Liquidators are here to help. Our team of licensed insolvency practitioners can provide you with expert help and advice when you are struggling under the weight of mounting HMRC bills. Speak to a member of the team today.