Are PAYE Arrears Pulling Your Company Down

Are PAYE Arrears pulling your company down? Written by John A Waller, Director. Reviewed June  24th, 2024.

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

The company can’t pay PAYE to HMRC?

  • Is your business behind with paying your monthly payment of PAYE?
  • HMRC Debt Management 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.

Are businesses struggling to pay over PAYE deductions? Soon, HMRC is chasing seriously for the arrears. However, if dealt with openly, the HMRC remains open to listening if genuine to solve the arrears if the business is viable. Be careful if the HMRC feels you are not serious or delaying matters. Then, they proceed firmly, even taking the step to 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 must deduct income tax from employees each pay date, either monthly or weekly.

However, many companies encounter severe cash flow difficulties and temporarily keep PAYE contributions deducted, awaiting payment to HMRC to pay urgent supplier creditors. The result is they rob Peter to pay Paul. However, this starts a difficulty that may 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 to pay the government over employees’ taxes. Unfortunately, we observe clients withholding payment to improve the working company capital.

Directors should pay attention to a demand letter from HMRC.

If you are 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 negotiating a Time To Pay with HMRC or other procedures.

Swift action reduces your chance of any personal liability.

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 must act quickly once they are aware of their company’s insolvency. Do not let PAYE arrears grow. If you do, you may be personally liable.

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

Your Company Down? If so, what are my company’s options?

Dealing with HMRC company debt.

Your business is failing.

When issues affect your ability to pay creditors, especially HMRC, do you need to understand what to do when your business is failing?

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 for a time-to-pay arrangement. However, 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.

Emergency finance may be arranged using invoice factoring or invoice discounting. Offering your company’s money 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 choosing 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  VAT applies. So, when you can’t pay VAT, what happens next?

Please get in touch with John to explore the options with company debt, which will help you and your company get back on their feet.

To view the management team, click on The Team At HBG Advisory.

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

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

Please call 0808 280 3581 or arrange a safe and private virtual meeting online. Together, we can resolve your issues and move on.

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