Company Can’t Pay PAYE To HMRC?
For a business to commence entering arrears of tax with HMRC and can’t pay PAYE either. Therefore, considered a serious problem, requiring immediate attention. If the arrears are PAYE, then HMRC will assess your company’s previous performance and whether they believe your intent to pay. If this is the first time, you’re having difficulty paying PAYE? Then HMRC will react (differently) from a company that has missed payments often.
HBG Advisory can help you with ‘negotiating with the HMRC‘.
If you have any concerns or further questions? Please call HBG Advisory on 0800 612 5448 for confidential, free advice and robust support regarding your present financial predicament. HBG Advisory and its team have helped many distressed directors and businesses navigate their way through insolvency.
From 1 December 2020, HMRC became a preferred creditor in the ranking of being paid. The new change has moved HMRC up the ladder and now is before the floating charge used by financial lenders. Subsequently, lenders who have issued loans you have personally guaranteed will possibly recover less, increasing risks to borrowers with guarantees.
UK Banks are concerned about the changes to HMRC preferential status, and the demands from that fear how companies and, importantly, directors react. Should HMRC wish, they may deploy many methods to collect tax utilising:
- Distraints, and
- Ultimately issuing winding-up petitions to companies.
Any of the above can accelerate the eventual failure of the limited company.
Unfortunately, once HMRC actions such action, the companies bankers lose control of their client’s finances.
Whose liability is the PAYE payments.
All payments remain the liability of the limited company, as it is a separate legal entity to the director.
However, if it is proven the director is guilty of fraud or misfeasance, they may potentially be liable for the debt.
Company Directors must be aware that they must not attempt to borrow money online, particularly at high interest rates, to repay your limited companies HMRC debt without first having the assurance your limited company will have the capacity to repay you in the future. Remember, many loans of this type require either personal security, like a charge on your home or a personal guarantee. Such action then means you have secured the debt of your company, for which you are not personally liable.
Consequences when your company can’t pay PAYE to HMRC?
Remaining unable to pay HMRC and having a HMRC tax debt problem due to insufficient money requires careful handling.
The HMRC has a finely tuned system for collecting tax. Firstly, they will write to you asking for payment generated by their new computer system. It would help if you took note of their request. The letter details the way to pay.
Suppose you fail to pay or contact them. Then penalties will start.
Therefore, you have to act quickly, as the system is robust and stronger threatening letters will follow, moving forward to legal action to recover.
Ultimately, HMRC remains authorised to commence a winding-up petition to achieve compulsory liquidation. Therefore, always respond to any correspondence and keep talking.
So please act quickly. Do not then ignore letters. Things will only then get worse.
Are PAYE arrears pulling your company down? If so, seek advice from a licensed Insolvency Practitioner.
Can I be held personally responsible for PAYE arrears debts?
HMRC may request a compliance visit to check your PAYE records. It is important you understand what a HMRC compliance check includes.
If HMRC surmises you have knowingly failed to pay your tax owed, then HMRC may submit a Personal Liability Notice (PLN).
Section 121C, Social Security Administration Act 1992, refers to how PLN’s provide HMRC the authority to hold company directors personally responsible when fraud or severe neglect exists in the tax affairs of a limited company.
Please contact the team at HBG Advisory for confidential expert help.
If you’re concerned about any of the above and currently pressured with PAYE debts, please call one of our confidential advisers for a free consultation on 0800 612 5448.
Directors exposure to not paying PAYE while insolvent!
Company Directors should be aware that owing PAYE is an indication of a company potentially insolvent. Trading whilst insolvent can potentially expose directors personally liable for debts of the company should it fail. If this is proven by a liquidator, and wrongful trading is found, then HMRC may issue a Personal Liability Notice (PLN).
Ensure you maintain contact with the Business Payment Support Service at the HMRC.
If you have not experienced any form of late payment with HMRC in the past? Then approach the HMRC Business Payment Support Service (BPSS).
However, if you have had previous issues, ensure you talk with the office contacted, as detailed in the top right-hand corner of the letter received. The option to contact the BPSS remains passed, as your situation no longer fits their support criteria.
The advice remains available regarding your tax responsibilities as an employer, by therefore contacting HMRC on:
Telephone: 0300 200 3200
Issues with PAYE Arrears and Paying on Time?
Then you may also write to them at their postal address:
National Insurance Contributions and Employers Office,
HM Revenue and Customs,
PAYE due date?
- No later than the 22nd of the following tax month, if you pay monthly;
- Paying quarterly requires payment by the 22nd after the end of the quarter;
- 19th of the month when paying a posted cheque.
All Employers remain required to account for PAYE to HMRC in real-time.
Confirm your liability with the Paye Tax Calculator.
For ease of reference, please carry out this function on the following link: the PAYE calculator.
Options on how to then pay arrears of PAYE?
HBG Advisory have an excellent track record dealing with PAYE issues. Various options exist to help you handle PAYE arrears. Do not delay in seeking help.
So when owing PAYE, you therefore have the following options:
Company Can’t Pay PAYE To HMRC? – Provision for PAYE Late Payment?
HMRC charges penalties from the term ‘the penalty date’, which is generally the day after the due date.
Penalties remain issued as a percentage of the total amount of the tax that remains overdue.
Invoice Finance / Factoring
Invoice or asset-based finance is the ability to sell unpaid due invoices. Unlike traditional finance, which can be impossible for companies with poor credit ratings, invoice lenders assess the company’s credit on the invoice raised.
Therefore, improving cash flow.
Time to Pay Arrangement (TTP) for PAYE
HMRC, if approached early enough, may therefore consider a Time to Pay Arrangement.
Qualification requires directors to prove that the company can afford to repay the PAYE over a maximum of sixty months, together with other taxes due for the tax year.
Company Voluntary Arrangement CVA
For many companies with tax issues with:
- Corporation tax arrears and
- VAT debt,
Then HMRC arrears sounds alarm bells, signifying cash flow issues and potential insolvency. Should company creditors add pressure, but the company remains viable, the company should consider a Company Voluntary Arrangement (CVA) over negotiating a Time to Pay with HMRC. By using a CVA, companies may defer creditor and tax payments for up to sixty months, while paying a percentage of the amount owed.
A CVA belongs to the insolvency family, though it does not mean the company has failed, requiring immediate closure. Insolvency Practitioners use CVAs to rescue companies, allowing trading to continue and directors to manage the company. IPs act as supervisors of CVAs in England and Wales.
For further detailed reading. Please then view ‘Options paying PAYE HMRC arrears‘.
Can HMRC hold me personally liable for PAYE Debts when my company can’t pay PAYE to HMRC?
Should the HMRC consider, you have knowingly, with fraudulent intent, declined to pay. Then they are authorised to present a ‘Personal Liability Notice’ (PLN).
PLN’s grant the HMRC power to hold company directors personally accountable (Section 121C, Social Security Administration Act 1992) in circumstances of fraud or negligence to pay tax. For further detailed reading, please view ‘can HMRC hold directors liable for outstanding tax?’. And Tax Avoidance schemes and penalties.
If HMRC issue you a penalty?
A notice contains what you owe, how you pay, and what you can do if you disagree with HMRC’s decision to charge you.
Pay the HMRC within 30 days of receipt of the notice. The penalty, failing to do so, will therefore incur interest charges.
You can appeal online through the service operated by HMRC’s PAYE for employers. As soon as you log in, select “Appeal a penalty.” You will receive an immediate confirmation when you submit your appeal.
Sometimes, HMRC accepts and settles the appeal automatically.
Listed below are examples of valid reasons usually accepted by HMRC for appealing:
- Incorrect data input on returns;
- Theft or crime;
- Health issues;
- Fire, flood, or natural disaster;
- IT computer failure;
- Employees no longer employed by you;
- Tax paid on time;
- No payments to employees;
- Time to pay Arrangement operating.
If you wish to appeal in writing? Please send your appeal to:
DM PAYE Late Payment Penalties,
HM Revenue and Customs,
Your Notice of Penalty Assessment contains a ‘Unique ID’ for each penalty.
Ensure you include the unique ID, enabling easy identification.