How To Manage Your Business Tax Debts With HMRC
If you have fallen into arrears with corporate tax payments such as VAT, Corporation Tax and PAYE, you need to take control of the situation and take action quickly to avoid fines and court orders against your company.
You shouldn’t wait for the taxman to contact you chasing late payment of business taxes, as this will work against you in rescuing the situation. You should be proactive in tackling your business tax debt and contact an insolvency practitioner as soon as you notice that cash flow issues will result in you being unable to pay your business taxes when they are due.
If you are upfront with HMRC about your cash flow issues when they arise, there may be an opportunity to negotiate with HMRC to pay off your tax debts over a period of time. This is known as a Time To Pay Arrangement.
It is possible to apply for a Time To Pay Arrangement on your own, however this is not advisable. As your case needs to be absolutely rock solid for HMRC to accept it and allow you the extra time to pay your tax debts.
The onus is on you to demonstrate to HMRC that, whilst you may be experiencing cash flow problems at the moment, your business is ultimately viable and that you will be able to keep up with regular monthly payments to pay off your tax debt.
A professional insolvency practitioner will be able to assess your company’s finances and what you can afford to pay regularly over time. They will build your case for a Time To Pay Arrangement by preparing your company’s financial information for HMRC, with cash flow projections, profit forecasts and examples of how costs can be cut elsewhere. They will also explain to HMRC the reasons behind the cash flow problems and how the issue will be improved so that you don’t fall behind in your tax payments again.
It is so important that all of this information is thoroughly researched and supported with evidence, as HMRC will not just hand out Time To Pay Arrangements to anyone. They need to be assured that your company represents a low risk to them, that the company’s financial problems are only temporary, and that you will be able to pay off your tax debt with monthly payments over a reasonable amount of time. That is why it is always best to consult an insolvency practitioner for assistance.
Once your insolvency practitioner has fully formed your case, they will guide you through the proposal and ask your approval to send the offer to HMRC and negotiate a Time To Pay Arrangement.
If negotiated to a successful conclusion, the Time To Pay Arrangement will set out how much money must be paid to HMRC via direct debit, over a set number of months, in order to clear your tax arrears. This could be a few months, 6 months, up to a year or longer. The time you are given depends entirely on what HMRC are willing to allow you, based on the evidence submitted, your industry and the risk that your company represents to them.
More Information and Advice on Negotiating With HMRC
For more information on managing your business tax debts and negotiating a Time To Pay Arrangement with HMRC, simply contact us. We have an excellent relationship with HMRC and years of experience in negotiating repayment terms with them on behalf of clients of all sizes. We can offer help over the phone, via email or through online live chat. We can arrange a meeting as your office at short notice, wherever you are in the country, to take a look at your case and advise you on your next steps.