Can’t Pay VAT What Happens Next

Can’t Pay VAT What Happens Next. Written by John A Waller, Consultant. Reviewed June 3rd, 2024.

I can’t pay my VAT bill? hat do I do about my VAT arrears? One of the most asked questions by distressed company directors.

Unpaid VAT

Operating a limited company and  your business is unable to pay its bills.

What are my options for VAT arrears?

Let’s say your company can no longer pay your VAT bill and other tax bills. Company directors can request a time-to-pay arrangement with His Majesty Revenue & Ccustomsto restructure your payments to an affordable monthly payment (usually over no more than twelve months), provided your limited company is viable. A short cash flow can however signify your limited company is insolvent due to not paying creditors and business costs as and when they fall due for payment.

Ensure when considering a VAT time to pay (payment plan) that your company can therefore afford to maintain the plan through to its final payment. HMRC will require each payment on time and pay VAT by BACS.

Failure to comply may lead to HMRC issuing directors with a Personal Liability Order PLN against the directors for the unpaid tax. Failure to pay NIC could lead to further action…

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My business has fallen in arrears with VAT.

What can I do? Could we ask for a time to pay arrangement?

Can’t afford to pay my VAT bill – what are my options?

If you cannot pay taxes and VAT, you can apply for a time-to-pay arrangement (payment plan) with HMRC to restructure your payments into manageable instalments. Short cash flow, however, can indicate insolvency if the company cannot pay creditors and business costs.

However, if your limited company cannot cover tax and VAT, you may set up a time-to-pay arrangement with HMRC to restructure payments. Note, however, that a shortfall of cash indicates insolvency if your limited company cannot pay creditors and other costs.

What if I can’t pay my VAT bill, and my Bounce Back Loan payment.

Should you be unable to make any payment as and when due for your limited company? It is essential to seek immediate advice from a licensed Insolvency Practitioner.

My business is behind with HMRC VAT and PAYE payments!

  • What happens next?
  • What about a time to pay?

It is important to contact HBG Advisory to deal with the non-payment of VAT and PAYE.

Always remember to act responsibly as a director.

Once you have exhausted trying to arrange a repayment plan.

As a company director, seek urgent help from a licensed Insolvency Practitioner. Certain tax debts may expose you personally and will only worsen if left. Please contact a member of our team today on 0330 056 3120 to resolve the situation.

Return to 20% VAT on April 1st, 2022

Since the 1st of April 2022, VAT rates have reverted back to 20%.

The return to 20% is expected to have a major change in business failure in this sector. Directors of limited companies must ensure compliance with their director’s duties and responsibilities.

The recent return to the 20% VAT rate already impacts many restaurants around the UK. HBG Advisory is currently helping many businesses struggling to repay their bounce back loans and return 20% VAT. Please contact John Waller on 0330 056 3120 for immediate help and clear HMRC debt.

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If you fail to contact HMRC or refuse to pay.

HMRC always seeks to contact you by letter, text or visiting your premises if you or your business fail to make an agreed payment.

However, if you fail to contact them or are unable to agree on an instalment plan, they can:

  • Instruct a debt collection agency to collect the money;
  • collect directly from your wages tax owed; or from your wages pension;
  • Remove items you own and sell them (if you live in England, Wales or Northern Ireland);
  • Assess your bank account or build society savings to take payment (if you live in England, Wales or Northern Ireland);
  • Issue court proceedings requiring your attendance;
  • being made bankrupt if VAT debt is as a sole trader;
  • close down your company if business tax.

Any costs, like auction fees, are usually added to your debt. Before taking any of these actions, HMRC will tell you and explain your rights, charges, and options.

Importantly understand what will happen if you don’t pay your tax bill.

Note however, you are not personally liable providing you have not acted fraudulently.

Making Tax Digital for filing your VAT

HMRC are helping companies with VAT software enable correct accounting.

You cannot use your existing VAT online account to send monthly or quarterly VAT returns.

You’ll need to sign up to Making Tax Digital (MTD) and use compatible software to keep your VAT records and file VAT returns.

Can you go to prison because you don’t pay VAT?

The intentional evasion of VAT is an offence under Section 72 (1) of the Value Added Tax Act. The maximum penalty for crimes brought before the Crown Court is seven years imprisonment and an unlimited fine.

Why can’t I pay VAT?

HBG Advisory supports directors in clearing HMRC debt and tax debt problems.

So you have started accumulating VAT arrears, causing creditor pressure.

A company with issues paying VAT may be insolvent. So directors must react to resolve the problem.

Usually, cash flow issues are the main reason for non-payment. However, operating costs may affect cash flow and lagging paying debtors.

What are my options?

You are raising questions about your company’s cash flow or lack thereof. As a director, you should ensure your company’s cash flow is in order. Therefore, you need to look into the problem immediately and plan what to do next. So you’re resolving how the crisis came about. However, the issue could be due to slow-paying debtors or bad debt.

Changes to His Majesty’s RC Status

Since December 1st 2020, HMRC now ranks as a preferential creditor in insolvency. The rank above floating charges are often issued by banks securing loans. The before, affecting how banks will lend as their position is weakened, exposes those who have also given personal guarantees, as they may no longer rely on their first port of call.

What next when you can’t pay HMRC?

I can’t PAYE & CORPORATION Tax also.

When companies fall in arrears with VAT, the same applies to companies that can’t pay PAYE to HMRC and Corporation Tax.

If your company employs individuals, you must collect PAYE and NICs from your employee’s payments. The company must then pay the agreed amount monthly. Not doing so attracts severe penalties and possibly director liability from December 1st, 2020.

If you can’t pay Corporation Tax – what next? You may face a penalty.

Equally, the details apply, but the penalties differ.

Contacting HMRC is essential!

Your first port of call when in the situation is to contact the correct departments at the HMRC. They are detailed in the top right-hand corner of any HMRC communication. So remember to quote your reference number.

You may consider negotiating a Time to Pay with HMRC.

If you require support, contact the team at HBG Advisory on 0808 280 3574.

Personal Liability for VAT

I am carrying on trading while insolvent (especially knowingly) could expose directors to personal liability for the company’s assets.

So wrongful trading raises many issues for directors, especially the accumulation of tax debt. The problem crystallises when the company enters insolvency. The result possibly being issued a Personal Liability Order PLN against the directors for the unpaid tax. Failure to pay NIC could lead to a personal liability notice from HMRC.

Examine the causes behind your failure to pay HMRC.

You’You’verd of the penalties for not paying your VAT or other tax liabilities. It would help if you got; you need to get to the root cause, so you don’t try again. If you know the root cause of your problem, you may commence a turnaround plan to resolve your cash flow issues.

If your creditors don’t pay on time, you’ll have difficulty paying your bills. Then make sure you get help quickly while chasing late-paying debtors and tightening your credit policy. Rem member, a sale is not a sale until paid.

But if your company spends more money than it’sit’sing, you must figure out whether it’sit’sble. So e advise you to talk to a licensed insolvency practitioner, who will assess your financial situation and advise you on options available to you and your limited company, ensuring your company’s directors are protected. You may require formal negotiations with your company’s directors, considering using a ‘Company Voluntary Arrangement (CVA)’if ‘our business is viable, failing which liquidation.

So, directors must understand dealing with HMRC company debt.

Can the business pay its bills?

If my business is unable to pay its bills? It probably is insolvent.

Therefore, as a company director. You should seek immediate help from Licensed Insolvency Practitioners, as found at HBG Advisory.

What to do when unable to pay VAT?

If you can’t pay VAT due to coronavirus (COVID-19)

Please then ensure you contact HMRC helpline if you cannot pay tax bills due to the coronavirus.

The phone number for VAT Payment Helpline

Contact number for business payment support.

Their contact details are:-

0300 200 3835

HMRC (VAT Division) Opening hours are 8 am to 8 pm

Monday to Friday,

8 am till 4 pm at weekends.

What then are my options?

Request an extension of time to pay the arrears or a more formal time to pay arrangement TTP if your business struggles with payment to HMRC..

To consider this, you will be required to keep your returns up.

The team at HBG Advisory is experienced in dealing with HMRC on behalf of clients, as they may consider it a stressful process.

HMRC provides a “Business Payment Support Service”. Approaching them for support encourages the request for a time-to-pay arrangement. How ver, do not bury your head and ignore the debt.

They require:

  • The business tax reference number;
  • The registered name of the business, along with your name;
  • Address of the company;
  • Business telephone number;
  • Your arrears you can’t pay.

To contact HMRC, they require a reason you have not paid. So e prepared to be asked:-

  • What attempts by the business have been made to settle the debt, if any?
  • Can the business pay anything amount of the debt?
  • The time required to pay the rest?
  • It depends on
      • Why your company cannot pay,
      • your payment history, and
      • Required time to pay the balance owed?

HMRC will ask you for details to assess the company’s ability to pay this debt through future payments.

Pay your deferred VAT in full.

You should have paid your deferred VAT in full by March 31st 2021.

If paid, you do not have to make contact.

I have joined the VAT deferral new payment scheme.

The VAT deferral new payment scheme was open from February 23rd 2021, to June 21st 2021.

If you’you’rethe VAT Annual Accounting Scheme or the VAT Payments on Account, you can join the scheme from March 10th 2021.

The new scheme lets you, therefore:

  • Pay your deferred VAT in equal instalments, interest-free;
  • Choose numbers of instalments, from 2 to 11 (depending on when you join).

How do I pay my VAT bill online?

Payment Method and bank details.

You can pay by Faster Payments, CHAPS or Bacs.

Therefore, it may be wise to set up a standing order so as not to fall behind

HMRC bank transfer details are as follows:

Sort codeAccount numberAccount name
08 32 0011963155HMRC VAT

Reference number

To make a payment, you will need your 9-digit VAT registration number.

Find your registration number:

  • in your VAT tax digital online account;
  • on your VAT registration certificate.

Do not put any spaces between the digits when paying your VAT bill.

BACS payments may delay your payment if you use the wrong reference number.

Paying VAT in Northern Ireland.

How long does it take?

Payments made by Faster Payments (online or telephone banking) usually reach HMRC on the same or next day, including weekends and bank holidays.

CHAPS payments usually reach the same working day if you pay within your bank’s processing times.

BACS payments, however, take three working days.

What if you are self-employed?

If affected by a coronavirus (COVID-19), you may claim a grant through the coronavirus COVID-19 self-employment Income Support Scheme.

What happens if I am unable to pay the VAT my company owes?

Options available:

1) Time to Pay arrangement with HMRC (TTP). Please read ‘Negotiating with HMRC for further guidance from HBG Advisory.

2) Closure options:

  • Arrange new terms with HMRC;
  • Company Voluntary Arrangement CVA;
    • CVA allows a business to keep trading while directors remain in control.
  • CredCreditors’untary Liquidation (CVL);
  • Wind up the company if all other options are not viable.

3) Have an Insolvency Practitioner protect the company while trading using a company administration or Pre-Pack Administration. The process allows the company to continue trading.

For further reading, please view VAT arrears, help advice and support.

Your business has tax problems. Is your business insolvent? ACT SWIFTLY NOW.

My accountant incorrectly completed my returns.

The directors are responsible for the accuracy of VAT returns.

The accountant usually will not be held liable, as they will say they carried out the exercise based on either information supplied or available.

Therefore, the accountant is not responsible for any mistakes.

What is the way forward?

So, then focus on collecting slow-paying debtors. Therefore, ensure you note their reasons for not settling the debt. When reviewing credit limits, don’t your heart rule your decision.

Otherwise, you will not clear HMRC debt, pay the VAT bill, and accumulate tax arrears.

Terminal loss relief

Terminal losses and VAT bad debt relief remain overlooked when a limited company considers insolvency. It applies when a business owner completes their VAT returns, though not up to date with VAT rules.

However, accounting for terminal losses and VAT bad debt relief could increase credcreditors’ments.

This page contains public sector information licensed under the Open Government Licence v3.0.

Can't Pay VAT! What Happens Next?
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Administration - A Guide for Directors
Administration - A Guide for Directors
Administration - A Guide for Directors
Administration - A Guide for Directors

What happens if the company can’t pay VAT owed?

Options when dealing with HMRC VAT arrears and company debt:

1) Negotiating a time to pay with HMRC, so your business may pay the VAT owed requires HMRC consenting to your company performing monthly payments over twelve months.

2) Closure options – Choose voluntarily to rescue your company while continuing trading with a Company Voluntary Arrangement (CVA) or close your company with a Creditors’ Voluntary Liquidation (CVL). However, if negotiating terms fail with HMRC, consider them, avoiding winding up the company.

3) Consider entering a company administration or Pre-Pack Administration if pending court action is about to take place. You may then appoint an Insolvency Practitioner (IP).

4) Additional funding for your business. Review various options.

I Can’t pay VAT. What happens next? – Spending more than it takes in

So if your company’s problem is it spends more than it takes in? Therefore, do you need to assess whether the company is viable and solvent?

Most importantly, it would be best for company directors to meet with an insolvency practitioner to review the company’s financial situation.

HBG Advisory evaluates your business situation and offers advice on your options. It can also involve formal discussions with your company’s creditors.

However, to resolve matters, you may need to consider:

  • Firstly, a company voluntary arrangement (CVA), or
  • Finally, if your company requires closing for good, a creditors voluntary liquidation (CVL).

So for further reading on the Director’s position, understand ‘Can HMRC Hold Directors Liable For Outstanding Tax‘.

Meet the HBG Advisory team for confidential advice on dealing with HMRC debt in a virtual meeting at home. Do not leave failure to pay HMRC nightmares stress you out!

“Shed no more tears over Vat.”

Don’t be drawn to borrow money online from lenders to enable paymentof an HMRC bill. Usually they require a personal guarantee making you then liable for usiness debt!

Examine the reasons why your unable to pay VAT.

So if you cannot pay your company VAT or other tax liabilities, you must identify the cause that impedes payment. However, once you understand the problem, you can resolve the situation in one way or another.

Perhaps late payment by your debtors impacts your cash flow negativelly. Therefore, focus on chasing these default payers and checking your current collection strategy and payment terms for the future.

However, if your business spends more money than it has earned, you need to assess whether the company is still profitable. So, act swiftly and arrange a meeting with a licensed insolvency practitioner to evaluate your company’s situation and advise on options. They may, however, request formal negotiations with creditors under a Company Voluntary Arrangement (CVA) or explore closure options, like a Creditor’s Voluntary Liquidation, if debt levels are abnormally high.

I can’t pay Vat! What Happens Next? – Impact of Coronavirus COVID-19?

If your company cannot pay due to the coronavirus, your company will not be penalised. Therefore,:

  • You should have suspended VAT payments due before June 30th 2020, and paid them any time up to March 31st 2021 or
  • Further, deferred your self-assessment on account payable July 2020 until January 31st 2021.

To ensure a formal agreement, negotiate with HMRC if your company cannot pay due to the coronavirus pandemic. Establish contact with the HMRC coronavirus (COVID-19) helpline (0800 024 1222) (View Coronavirus Business Help). However, remember, you will have to pay this over to HMRC. So ensure you, therefore, keep it safe.

I can’t pay Vat! What Happens Next? – Can You Pay VAT Late?

However, HMRC is eager to collect VAT under normal circumstances, as it differs from other taxes. You collect tax on behalf of the HMRC, unlike income tax on your income.

During the COVID-19 pandemic, however, late VAT collection has relaxed to support companies’ cash flow. January 31st should have paid it in 2021. (See above)

Being a Director and Unable to Pay VAT.

When a limited company director discovers he cannot pay VAT, this should raise red flags, as it indicates the company is insolvent. Unable to pay the VAT can have severe consequences for the business and its directors.

You should then check your cash flow. Either negotiation with HMRC needs to be started to keep your VAT arrears up to date, or contact a licensed insolvency practitioner to advise you so that you, as a director, can fulfil your fiduciary duties and protect creditors from increasing corporate debt.

Cash flow is mainly due to how fast debtors settle their accounts and how good the debts are. Therefore, consider the following options:

  • Get on the phone with your customer immediately;
  • Chase regularly for payment – Court help;
  • Put your customer on hold immediately;
  • Charge with late payment interest;
  • Agree to a repayment plan.

Having unmanageable VAT Arrears?

What are the consequences of my business having Vat Arrears?

If your company falls behind in paying VAT and falls into arrears, HMRC will want to determine the cause of the arrears. In most cases, insufficient working capital or deliberate avoidance of paying VAT.

So, if your business is experiencing cash flow issues and cannot pay, do not panic. Options can help you, from entering administration to negotiating a time-to-pay arrangement with HMRC.

However, do not continue to trade if you cannot pay taxes. Your company may be insolvent due to its VAT bill and insufficient cash. So it would be best if you had immediate action to protect the company and its creditors.

HMRC’s normal response to non-payment of VAT is, in most cases, to give more attention to companies that fall behind and, if payment is overdue, to send a dissatisfaction letter to the company that requires immediate payment of VAT arrears. So don’t panic and contact HBG Advisory for immediate assistance.

HMRC VAT Payments

Paying VAT as and when it falls due is essential for a business to trade solvent and avoid fines.

We detail below areas often asked from us.

  • Keep in regular contact with HMRC and your accountant if unclear.
  • Once your VAT return is submitted, however, you either owe or await a repayment. The simplest way to pay is by a Direct Debit.
  • VAT payments must be cleared funds in HMRC’s account by the payment deadline.
  • Telephone banking (Faster payments) offers the next or the same day payments.
  • Direct Debit, BACS, debit or credit cards, and bank or building society payments. However, it takes three days to clear.

What to do and when to do it?

When registered for VAT, ensure you complete VAT returns, submit them, and ensure payment when due.

However, HMRC may require you to account for monthly rather than quarterly VAT.

You must understand that VAT requires settlement on time to avoid expensive VAT fines.

Deadlines for Filing and Paying your VAT Return?

When a business trades within its cash flow, it will submit its VAT returns quarterly or annually.

  • Quarterly VAT payments – By submitting your VAT returns online with HMRC, you must ensure your VAT liability is paid by midnight of the one calendar month and seven days after online.
  • Annual VAT Payments – If you have an Annual Accounting Scheme for VAT. You submit your VAT return annually and are required to perform online payments towards your annual VAT bill. However, when operating the Annual Accounting Scheme, your VAT return must be filed and paid in full two months after your annual accounting period.

What are my options? – Can I pay my VAT bill in Installments?

YES. You have to arrange monthly payments directly with HMRC. However, do not assume you can until agreed.

HMRC may require you to account and pay monthly for VAT. Usually, this is when you have struggled to maintain payments in a previous business. Your business may also have often exceeded the threshold for quarterly payments.

VAT Assessments?

HM Revenue and Customs (HMRC) sends you a tax assessment notice. You or your business have received the assessment because you have failed to send in a completed return for the quarter-end, along with any payment due.

You must complete and forward your VAT return, and any payment due that corresponds to the assessment date, without delay.

The assessment of VAT due is too low. You must therefore advise HMRC within 30 days. If you fail to do so, however, penalties apply.

If too high, you are unable to appeal. However, you must complete and forward a VAT Return along with settlement.

Borrowing is not always the answer. What if you are trading at a loss? The cost of borrowing will increase expenses and unforeseen losses. You may have to sign personal guarantees and either expose yourself financially.

Tourist Sector Requesting Short-Term help with VAT?

A temporary VAT cut will affect accommodation and attractions. From July 15th 2020 to January 12th 2021, the reduced (5%) VAT rate applied to accommodation and admission to attractions across the UK. However, this is no longer in place.

What is VAT?

Why and when do I register?

Value Added Tax (VAT) is a form of indirect tax levied on businesses that trade within the UK by HMRC. It applies to a company or individual when the turnover exceeds or expects to exceed £85,000 in any 12-month trading period. Businesses must be VAT registered once the threshold is reached. However, you may register voluntarily for VAT beforehand.

When registered, the business or individual must conform to VAT regulations moving forward.

VAT Bill – When does payment fall due?

VAT returns require electronic filing, usually every three months. You submit your business return within one calendar month and seven days following the end of an accounting period. However, the payment must be no later than the seventh last day of the month, following month-end after quarter-end. If not, however, the businesses are subject to a fine.

Your quarterly VAT return shows:-

  • Net total purchases and sales.
  • Sum of VAT due to be paid to HMRC
  • VAT reclaimed from HMRC.
  • VAT refund from HMRC.

How do I get out of Paying Vat?

You can’t.

The only way to avoid VAT is not to be registered, as your turnover is below the annual VAT threshold of £85,000.

Common VAT Problems?

  • Unexpected VAT Bill?

Unexpected VAT bills can cause serious financial problems for companies when faced with being unable to pay on time or if at all. Whether it’s a retrospective calculation by HMRC or a misunderstanding by yourself, this needs to be dealt with urgently. Remember. A huge bill means high turnover. It would be best to investigate why you do not have the cash. Is your business viable? A high VAT suggests it is, so why have you no cash? Are hidden overheads absorbing liquidity?

If you receive a VAT estimate and can’t pay, contact the VAT and get your completed returns in, as it is the best way to resolve Negative Cash Flow issues.

If you avoid settlement of your VAT because you cannot, send your completed return in and negotiate with HMRC. Receiving an estimate may only compound your problem.

  • Errors by my Accountant?

Although an accountant manages the company’s finances, directors remain responsible for ensuring that the VAT returns submitted to HMRC accurately reflect the company’s tax affairs and liabilities.

If your accountant has made a mistake? You, as a director, are responsible for the accuracy of your VAT return. So, any missed previous payments or under-payments are still your responsibility. The HMRC does not regard a mistake by the accountant as a legitimate justification for your company’s late or non-payment of HMRC VAT liabilities.

Moreover, ensure you are always clear on what is happening with your VAT account.

  • Forgetting to cancel registration for VAT.

We regularly identify businesses that have forgotten to cancel VAT registration. The company may incur an unexpected VAT debt burden. However, if this is the case, contact the VAT helpline as soon as possible to resolve it. The numbers are detailed below.

If you still have a problem, please contact the team at HBG Advisory,

  • Failure to Register for VAT?

We experience this regularly. It is one of the most common mistakes made by businesses. Failure to register can cause significant business problems, and the VAT bill can increase exponentially with HMRC’s fines and penalties. If this is the case, talk to VAT and arrange a time-to-pay arrangement. If not, contact HBG Advisory.

Annual VAT Accounting.

The Annual Accounting Scheme requires you:

  • Make advance contributions towards your VAT bill – based on your last return (or estimated if you’re new to VAT);
  • Submit one VAT Return a year.

Since April 1st 2019, most businesses have been able to keep digital VAT records and use software to submit VAT returns.

HMRC VAT Late Payment & Arrears?

Example of a Debt Enforcement Letter chasing unpaid VAT.


Suppose a company is in arrears and cannot pay the VAT or files its VAT return late. Then HMRC often imposes surcharges. These surcharges can increase the business’s financial burden, making it harder to pay and get back to a level footing. In turn, this can cause financial difficulties for the company. Again, keep talking to HMRC,

Ask for help.

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Letter from HMRC over unpaid VAR

Surcharges you pay to HMRC?

  • A surcharge is calculated as a percentage of VAT outstanding on the due date defaulted.
  • The surcharge rate charged increases each time your business defaults in the surcharge period.

This table, as per HMRC, details the charges your business defaults again within a surcharge period.

There is no charge with your first default.

Defaults within 12 months. Then a surcharge if annual turnover is less than £150,000.

Surcharge if yearly turnover is £150,000 or more.

2 in 12 months. No surcharge. Over £150,000. 2% (no surcharge if this is less than £400);

3 in 12 months. 2% (no surcharge if this is less than £400). Over £150,000. 5% (no surcharge if less £400);

4 in 12 months. 5% (no surcharge if this is less than £400). Over £150,000. 10% or £30 (whichever is more);

5 in 12 months. 10% or £30 (whichever is more). Over £150,000. 15% or £30 (whichever is more);

6 or more in 12 months. 15% or £30 (whichever is more). Over £150,000. 1 5% or £30 (whichever is more).

I Can’t pay Vat! What Happens Next?

HMRC Penalties?

The HMRC may charge you a penalty of up to:

  • 100% of any tax you may have under-stated or indeed over-claimed;
  • 30% of an assessment if the HMRC sends you one too low, and you did not advise them of the error within 30 days;
  • £400 for submitting a paper VAT Return without exemption.

Data above by OGL

Distraint and a Creditor’s Voluntary Liquidation.

If a company cannot pay VAT, HMRC may send a dismantling letter demanding immediate payment of owed amounts. Non-compliance results in an enforcement officer attending with a distraint order. You must now protect the company, its assets and creditors’ interests. Seek advice from a licensed Insolvency Practitioner who can offer various solutions.

To consider a Time to Pay Scheme. HMRC then requires the following:

  • Business tax reference number;
  • Name of your business;
  • Company Number (If Limited or LLP);
  • Duly authorised contact name;
  • Full trading business address. (Accounts);
  • Telephone number & mobile;
  • Details of the outstanding tax.

Then you have to explain why: –

  • The business cannot bring the tax up to date;
  • What if any funds are available to pay an amount on account?
  • What actions have you taken to raise funds for the business to pay the TAX debt;
  • The time required to bring outstanding TAX up to date;
  • Consideration of past payment records. Have you had Time to Pay before?

Raisng Additional Finance To Put in the Company 

Consider a short-term loan to bring working capital into your business to meet immediate cash flow requirements. However, interest charges are usually relatively high for short-term loan facilities, but maybe less than the penalty charged by HMRC.

Speak to your bank. Enquire about eligibility for an overdraft facility.

Are you using an interest-free credit card? 

HMRC charges a fee for card payment, though it is lower than penalty charges. HBG DO NOT advocate credit cards to pay other debts.

So further explore short-term finance. Examples are IWOCA, EZBOB, and FundingCircle for short-term financing.

When Should You Start to Worry?

When you realise you owe VAT, have not registered for VAT, or have fines for not paying VAT, you must react quickly. Therefore, contact HMRC to agree to an arrangement. You will avoid hefty fines compounding the financial burden. Remember, however, that HMRC will never go away and requires resolving.

Call us today on 0330 056 3120 to arrange how we can help deal with HMRC pressures and eradicate the trouble of agonising about taxes when unable to pay the HMRC.


Contact the Business Payment Support Service (BPSS), a payment helpline for companies that cannot pay their VAT and are struggling to secure subsequent payments to HMRC.

You need to call the “BPSS” at the HMRC if you can’t, so pay in full before your payment deadline.

You can contact the “BPSS” on 0300 200 3835.

The HMRC are open:

Monday to Friday, from 8 am to 8 pm.

Saturday, from 8 am to 4 pm.

HMRC Offices around the UK

For VAT assistance, see HMRC VAT Help on:

Complaining to HMRC – VAT

If you wish to complain to the HMRC regarding your VAT view – COMPLAIN ABOUT HMRC

Vat deadline calculator

If you need help when you can’t pay your VAT?

Our team has extensive experience dealing with HMRC for businesses who can’t pay the VAT,

Whatever. ACT FAST!

Please call us on 0330 056 3120 for 100% confidential, free initial, no-obligation advice.

Do not struggle.

If you are unable to pay your VAT. Then consider a:

  • Creditors Voluntary Liquidation;
  • If urgent, consider a Company Administration to protect value in assets and jobs.

I Can’y pay VAT. What happens next – Bailiff – Enforcement Officer Visit

If an HMRC bailiff visits you, you must understand what they can take from your property.

Usually, HMRC is the most common creditor for business trading in the UK. If a company falls behind in making payments to any part of HMRC, this can pose a business problem. HMRC does not remove irregular missed or late fees. If they are stretched, they will send bailiffs if the situation remains unpaid or agreed upon.

Typically, HMRC does not instruct bailiffs at the first stage of a late or missed payment. However, HMRC will issue reminders, new payment fines and interest charges, encouraging settlement early. Once this process starts, you should immediately contact HMRC (as detailed above) and arrange a solution. The longer you ignore the problem, the less likely your chances are of reaching a compromise with HMRC.

Remember, HMRC will only instruct Bailiffs as a last resort when all else has failed.

For further reading, please view bailiff powers with ltd companies.

Is it a Criminal Offence to Avoid Paying VAT to HMRC?

Making a late payment to HMRC for VAT is not a criminal offence. You need to maintain regular contact with HMRC, highlighting that they are aware of your circumstances and helping, so they do not need to escalate collection or enquiry.

Sometimes, however, when arrears reach a specific trigger point, HMRC will send a ‘Notice of Requirement to Pay a Security for VAT’. Therefore, a deposit is required, acting as a bond, to secure future debt. Security bonds have a 30-day payment term. Failure to deposit this with the HMRC is considered a criminal offence, and HMRC will instruct the court for collection.

For further reading, please view: Can HMRC hold directors liable for outstanding tax?

Every effort should be made to avoid this, and should it happen, then urgently discuss it with your accountant or HBG Advisory. 0330 056 3120.

Allowances not considered?

The VAT surcharge system for late or non-payment can cause a business to suffer significant fines/penalties for failing to account for VAT to the HMRC on the deadline date. Therefore, you must contact HMRC once you realise you cannot make the VAT payment. Then you can negotiate an agreement for an extension to settle the debt owed.

Please contact us today! We offer FREE initial advice on how we can help your struggling business move forward with less pressure and a more secure foundation for growth.

Lastly, show the door to tradespeople who insist on cash in hand VAT.

So let’s take the next step together.

  • Please call HBG Advisory on 0330 056 3120 and speak to a specialist about VAT issues. So meet the team at HBG Advisory.
  • We will assess the company’s recent trading, cash flow, assets, liabilities, and any pressing creditor action, in clear English. Jargon-free.
  • We will arrange a meeting to agree on a suitable plan to protect the company and your position.
  • Our team will find the best way to proceed, considering all matters particular to your situation.
  • You will be under the guidance of a Licensed Insolvency Practitioner, who act as court officers and qualified, experienced professionals.

Call 0330 056 3120. HBG Advisory will help when you to stop worrying and move forward today!