Under pressure to collect more tax owed, HMRC is returning to normal levels of debt enforcement activity and moving away from pandemic tolerance. As a result, we are seeing winding-up petitions against companies.
HMRC chases owed money from struggling firms amid inflation, high interest, and low spending. HMRC’s aim is to recover tax owed from a company’s liquidated assets.
In recent years, the tax gap has decreased; however, the difference between the amount of tax that should be paid to HMRC and what is paid is still £32bn or 5.2%.
Time-to-pay arrangements
For a company experiencing difficulty paying its tax liabilities, the best way forward is to agree to a time-to-pay arrangement with HMRC. This avoids the possibility of a winding-up petition, although early engagement with HMRC is essential.
- The company’s specific financial circumstances will determine an affordable, regular monthly payment agreed upon. To ensure companies can meet future payments, they should avoid setting high monthly payment amounts.
- HMRC needs financial outlook and fundraising info to address tax liability issues.
- The arrangement intends to be flexible, enabling adjustments to the monthly payment over time.
Prior to agreeing to a time-to-pay arrangement, HMRC may want to see company assets released, with the funds raised used to repay tax. This might mean selling vehicles, increasing business borrowing or directors putting personal funds into the company.
HMRC’s guidance to paying a debt with a time-to-pay arrangement can be found here.
How can we help you?
We can help your company avoid winding-up petitions if struggling to pay tax liabilities. Please contact us on 01444 716946 or on 01273 963656 or alternatively email us here.
