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Written by
John A Waller

Are PAYE Arrears Pulling your Company Down?

Are PAYE arrears pulling your company down, with no strategy to resolve the issue?

Company can’t pay PAYE to HMRC?

  • Is your business behind with paying your monthly payment of PAYE? 
  • HMRC commenced chasing you for PAYE?
  • Has legal action started regarding arrears of PAYE payments?

All employers must ensure they deduct PAYE from their employee’s payroll. 

Businesses struggling to pay over PAYE deductions? Soon have HMRC chasing seriously for the arrears. However, the HMRC, if dealt with openly, remain open to listening if genuine to solve the arrears if the business is viable. Be careful, though, if the HMRC feels you are either not serious or merely delaying matters. Then they proceed firmly, even taking the step to then issue a move to the liquidation to bring closure, rather than allow the arrears to escalate.

What are the potential consequences of having PAYE arrears?

Employers remain obligated to deduct income tax from employees each pay date, either monthly or weekly.

However, many companies encounter severe cash flow difficulties and provisionally keep PAYE contributions deducted, awaiting payment to HMRC to pay urgent supplier creditors. The result is they rob Peter to pay Paul. However, this in itself starts a difficulty that perhaps will eventually close your business.

PAYE contributions to HMRC remain a priority, though not a preferential creditor. HMRC deals with arrears harshly. Directors have a duty of care as a director to pay over employees tax to the government. Unfortunately, we observe withholding payment as a way to improve the companies working capital. 

Directors should not ignore a demand letter from HMRC

If concerned, please contact HBG Advisory to resolve the issues FAST!

The team will discuss how to resolve and move forward once an understanding of your company’s financial standing is agreed upon. Only then can HMRC talks begin proposing a Time To Pay or other procedures.

Swift action reduces your chance of any personal liability. 

PLEASE, DO NOT ignore the demand letter.

PAYE arrears? Then you may be personally liable?

Being unable to pay PAYE contributions in itself signifies potential Insolvency. So take earlier rather than later advice. 

Suppose your company traded while insolvent? You run the risk by not taking preventative action against fraudulent trading while insolvent.

Directors remain required to act quickly once you are aware of your company’s insolvency. Do not let PAYE arrears then grow. If you do, you may be personally liable.

Directors, however, must never take any demand for payment from HMRC carelessly.

Are PAYE Arrears Pulling your Company Down? If so, what are my company’s options?

Dealing with HMRC company debt.

Options paying PAYE arrears? Exist which may help failing companies. Arrears of PAYE require the action of one sort or the other. Tax does not go away. Focus on paying the arrears off; otherwise, the future is utilising an insolvency procedure.

A solvent company suffering a cash flow crisis can negotiate with HMRC to agree on a time to pay arrangement. Take note, though, missing a payment will collapse the agreement and lead to further problems, if not compulsory liquidation. Tread carefully and only fully commit if you believe your arrangement will succeed—failing which consider options with the IP available to you.

Emergency finance may be arranged using invoice factoring or invoice discounting. Possibly offering the money your company requires settling company creditors while improving cash flow.

Finally, assuming your company remains insolvent. Then a company administration protects the company from further action from HMRC and other creditors. Otherwise, HMRC may petition to wind up your company. Read further on HMRC Debt Management.

Understand available options regarding arrears of PAYE

HMRC must collect taxes and chase intently those in arrears. However, deal with HMRC professionally by opting to choose an IP to support you. HBG has assisted many companies and distressed directors. The key is to act quickly and openly to clear HMRC debt.

When in arrears with PAYE, the same applies to VAT. So when you can’t pay VAT what happens next?. 

Please contact John at HBG Advisory to explore the options with company debt which will help you and your company get back on their feet.

To view the management team: The Team At HBG Advisory

PLEASE NOTE: Tax does not go away. Once addressed, you can focus on building your business back and improving your health!
Contact HBG Advisory. Support is available navigating through the minefield of PAYE and arrears.

The Licensed Insolvency Practitioners at HBG Advisory have over many years given highly valued commercial professional advice and support to many directors and companies throughout the United Kingdom. Remember, help and support are at a close hand dealing with HMRC agencies.

Please call 0800 612 5448 or arrange a virtual meeting safe and private online.  Collectively, we can resolve your issues and move on.

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