Negotiating with HMRC

Negotiating with HMRC.Written By: John A Waller Director Reviewed: July 18th, 2024.

As licensed insolvency practitioners, HBG Advisory is here to help negotiate with HMRC – Inland Revenue Debt.

HM Revenue and Customs has vast resources to recover unpaid taxes. Prioritising HMRC Debt is essential.

If you can’t pay VAT, what happens next, and the company can’t pay PAYE to HMRC on time? Then, something is financially wrong within your business, and you must safeguard your position as a director and the company’s creditors.

Paying debt to HMRC, whether VAT, PAYE, or corporation tax, on time is crucial for every company. Failure to do so is a sign of insolvency and can lead to action against the company and you as director for wrongful insolvency trading. For options therefore paying HMRC, please read ‘options paying PAYE HMRC arrears‘. 

However, do not create a head-in-the-sand moment.

Each dispute between a customer and HMRC must be considered and resolved separately, not as part of an overall ‘package deal’. Usually, resolution by agreement provides an effective, efficient result.

Dealing with VAT

COVID-19: Support on negotiating time to pay

Coronavirus COVID-19: support on negotiating time to pay.

Negotiating with HMRC. – Action Speaks Louder Than Words.

If you require extra breathing space to pay HMRC, VAT and PAYE, or have a tax dispute? It would, therefore, be best if you acted quickly. The HMRC will issue threatening letters for non-payment. Take action immediately. Avoid HMRC distraint and debt recovery. However, failure to do so can affect your ability to execute any HMRC negotiations (repayment plans) with the HMRC problematic. It can also lead to late payment penalties, fines, and interest charges.

For example, if still before your payment due date, you should call their Business Support Line and talk to them (Agree on pay arrangements with HMRC). I don’t believe any “soft” options remain. It would help if you were honest about your cash flow issue and how you can make the money due. Failure to do so will lead to legal action against the business. If this is not the first time your payment has been late, do not expect much support unless you demonstrate extraordinary circumstances for this repeat issue.

So, take early preventative action now to avoid a winding-up order (dealing with a winding-up petition) or having to consider corporate insolvency like a “Creditors Voluntary Liquidation CVL!

There are two main conditions that require you to start negotiating with HMRC to arrange a ‘Time to Pay’ arrangement. 

  • It is brought to your attention that you remain unable to pay your tax when it is payable;
  • If you fail to pay by the payment date, you will receive an HMRC payment demand, possibly threatening notice of intent to commence an action to recover tax owed legally.

HMRC debt management support

However, owing any tax to HMRC is a worry. Repayment often requires robust advice. Please contact our team for free initial advice.

The longer you leave the HMRC problem, the less likely HMRC will agree on suggestions to resolve any issues.

Negotiating with the HMRC. – Appointing Someone To Help With Tax

Ensure you appoint someone to act on your behalf if you feel unsure about HMRC.

You may allow a person or organisation to handle HM Revenue and Customs (HMRC) for you. Your accountant, tax specialist, tax lawyer, trusted friend, or experienced relative remains your option.

If required to complete a self-assessment tax return, HMRC will forward all communications to the person you’ve authorised. They, though, will send you tax bills or refund payments.

When you require help with your self-assessment return, call the HMRC. Ensure the nominated person to help you is with you when you call. The HMRC will confirm their identity and check if you want them to represent you.

When you authorise a nominated agent to supervise your tax affairs

An appointed agent can be:

  • A qualified accountant or tax adviser;
  • An experienced friend or relative;
  • A member of a voluntary organisation.

The HMRC maintains a standard for agents that are accepted.

To appoint an agent, ask them to log on to the HMRC’s online authorisation service or complete form 64-8 and forward it to HMRC.

You may appoint a VAT agent to log onto the VAT online services.

Additionally, you may authorise a person to be your trusted helper to manage your tax affairs online.

They may be a friend or family member. They can:

  • Ensure you’re paying the correct amount of Income Tax;
  • Update your tax account;
  • Prepare a claim for a tax refund payable to you.

However, you remain legally liable for paying your tax.

Authorise a friend, relative or voluntary organisation to act as an intermediary.

If you cannot pay the tax due to ill health or do not speak or understand English, arrange for someone to interpret your dealings with the HMRC. Known as an ‘intermediary’. An intermediary should:

  • Talk to the HMRC and answer any questions for you;
  • Assist in the completion of any forms requested by HMRC;
  • An intermediary, though, has no access to your tax online;
  • To authorise an intermediary to assist in interpretation, write to HMRC.

National Insurance Contributions and Employers Office
HM Revenue and Customs
BX9 1AN

Negotiating With The HMRC? – HMRC Business Payment Support Service.

Telephone: 0300 200 3835

Monday to Friday: 8 am to 8 pm

Saturday and Sunday: 8 am to 4 pm

You must contact that office if you missed the payment deadline and received a letter from HMRC threatening legal action.

Imperative You Make Contact.

Before you contact HMRC:-

  • You’ll need to know;
  • Your reference number (for example, your 10-digit Unique Taxpayer Reference or VAT reference number);
  • The amount of the tax bill you’re finding difficult to pay, and why?
  • What you’ve done to try to get the money to pay the bill;
  • How much can you pay immediately, and how long do you need to pay the rest?
  • Your bank account details.

What Happens When You Contact HMRC?

  • HM Revenue and Customs (HMRC) enquire about your income and expenditure;
  • Your assets, savings and investments;
  • What are you doing to get your tax payments in order?

HMRC decide whether you should pay immediately. If unable, they’ll determine whether you’ll get your payments back on track with more time.

However, in more complex cases, HMRC may ask for proof before deciding.

HMRC may allow you time to pay your debt, known as a TTP (Time To Pay) Arrangement.

If agreed, HMRC will assess what you can pay now and how much over what period, usually by Direct Debit on the agreed dates. You will be liable to interest on the late payments.

If you begin negotiating a payment time with HMRC, you must keep those payments up to date. Otherwise, they are likely to be cancelled, and immediate legal action will be issued.

Negotiating with the HMRC during Coronavirus COVID-19

During the Coronavirus pandemic, the HMRC is more amenable to help as the government strives to assist businesses during this challenging period.

Usually, Time-to-pay agreements have a 3.5% penalty applied, though, during the pandemic, Chancellor Rishi Sunak says this is to be waived while the pandemic continues.
So, if you are worried about not paying the HMRC, this should be your first option to resolve the matter. Remember to contact HBG Advisory for help!

The HMRC provides a new helpline for business owners.

HMRC Coronavirus Helpline Telephone: 0800 015 9559

You only agree to instalments, which you can pay.

When talking to HMRC, only agree on a monthly amount you can afford. Do not be pressured to decide on an amount you will fail to perform.

Ensure they understand. The HMRC will have little confidence in your arrangement if you agree to whatever they propose and fail to meet the arranged payment a month later. Credibility with the HMRC remains essential.

Take time to understand your cash flow, and be honest and perhaps conservative in your figures, ensuring AFFORDABILITY.

Ensure your genuine thoughts and cash flow remain honest and HMRC informed. You usually only have one chance, so professional advice is essential and ranks with credibility with HMRC. HBG Advisory can help those with many years of experience dealing with HMRC.

When negotiating with HMRC, they will allow you to take matters seriously. Remember, they control our public money and are also held to account.

Accelerated Payment Notices (APNs)

Accelerated payment notices exist when the HMRC presumes the person in receipt was involved in a tax avoidance scheme. Therefore, they require payment of the avoided tax detailed in the notice to HMRC, usually within 90 days of receipt.

HMRC Tax Help?

PAYE/N.I. Pay Your Tax Bill Problems?

Limited companies can afford director’s protection. However, protection does not apply to PAYE or National Insurance arrears when a director proves negligent. If so, directors should seek help. Contact HBG Advisory today for immediate help!

Trading while insolvent and allowing preference to a creditor over PAYE or NI can enable HMRC to take action.

Negotiating with the HMRC. – Can’t Pay Your Vat?

VAT arrears should be promptly acted upon when you can’t pay VAT. Notable VAT arrears can mean insolvency, which may prompt HMRC to investigate the company’s tax affairs.

What you can do: VAT Arrears require immediate resolution. Ensure you contact the HMRC as soon as you know you can’t pay your VAT. Negotiate if. If you experience a problem, contact HBG Advisory, and we will assist.

Negotiating with the HMRC. – Can’t Pay Your Corporation Tax?

Corporation tax. – A tax paid by businesses on year-end profits. The current Corporation tax rate is 19% for companies with profits under £50,000. However, for companies with profits over £250,000, the tax rate is currently 25%

The HMRC claims corporation tax payments, providing profits below £1.5 million, nine months after your business tax period ends. Often, this creates a problem, as some business owners use the tax provision for cash flow rather than pay it over as when due, if not before. It becomes challenging to find tax money later.

HMRC uses the same collection strategy to collect outstanding corporation tax—they will issue fines, and the debt can increase substantially. So, looking for advice quickly and arranging a time-to-pay arrangement is essential, which requires consulting a licensed insolvency practitioner for further information.

Negotiating with the HMRC. – HMRC’s Powers To Secure Overdue Tax.

HMRC remains no longer a Preferential Creditor. In April 2014, changes to the Law allowed the HMRC to secure tax overdue from an individual or company bank account. To do this, HMRC has a duty of care to advise you and the company of its intentions via many requests and demands. They can freeze your bank account as an initial warning to leverage their position to prompt you to pay. If they do this, £5,000 must be left in your bank account after they have drawn cash out.

Can The HMRC Pursue Directors For Tax Arrears?

The HMRC can personally pursue directors for PAYE tax arrears and National Insurance Contributions under the Social Security Act.

We have helped many businesses with cash flow issues and prepared their case for negotiating with HMRC. Remember, the HMRC is an Unsecured Creditor. Remember, you are in a “negotiation” and ask for 12 months to pay; you may only get offered six months. We have experience in negotiation that could help you. 

Consequences of refusing to pay HMRC

If you don’t contact or agree with HMRC, they may use a debt collection agency. Collect what you owe directly from your wages or any monthly pension payments you receive. Remove goods you own and sell them in public auction to pay the tax debt. (if you live in England, Wales or Northern Ireland).

Directors of Accountability & Joint Liability.

Directors and LLP members remain jointly and severally responsible for specific unpaid tax debts.
The Royal Assent of Finance Bill 2019/20 set out to catch in a net for HMRC, directors, LLP members, shadow directors and bodies involved in a company’s, or an LLP’s, tax evasion, avoidance or phoenixism scheme. Then, they remain jointly and severally liable for the business’s unpaid tax.
This bill prevents individuals from profiting while operating an avoidance or evasion scheme and entering an insolvency process for their business.

For a Joint Liability Notice to be issued, five requirements remain before the HMRC can give it.

Negotiating With The HMRC – Requirements?

The company/LLP was engaged in tax avoidance or evasion.
Tax liability arises from avoidance or evasion.
An insolvency procedure is underway for the company, or there is serious potential for insolvency.
The person was either responsible for the company/LLP’s conduct, enabled it, or benefited from it.
There is a serious possibility some or all of that tax will not be paid.
Changes to the rules will help HMRC benefit from issuing a Joint Liability Notice when serial insolvency offenders do not pay tax.

Negotiating With The HMRC – Targeting Phoenixism in the UK.

Three conditions are required before any notice:
Any previous companies that became insolvent and had tax owed to HMRC.
If a person is connected to two or more companies undergoing an insolvency process within a five-year term.
And if any person was combined with a company that operates the trading of any insolvent companies.

Changes will tag tax liabilities for periods once the above bill acquires Royal Assent.

Negotiating With The HMRC – Does HMRC Ever Write Off Debt?

An owner-managed business means your business will be registered with HMRC as a trading entity. Whether a limited company, LLP, or sole trader, the HMRC is responsible for seeking tax dues.

The HMRC remains focused and time-sensitive when collecting outstanding debt to the crown. They will persist until paid and may chase you, even if your business fails, if any misfeasance is proven.

If your business faces financial pressures and trades, the only option is to pay the tax owed—failing, which may worsen past resolution.

The culture of the HMRC does not write off taxes owed unless they are beyond collection.

If you ignore the tax owed, it will grow and attract interest and fines. Additionally, HMRC will issue a winding-up petition once they have exhausted all collection methods.

Your business runs the risk of insolvency. This then appoints the official receiver, who investigates the director’s conduct and whether the company traded insolvent.

So, if your business is threatened, seek help from an insolvency practitioner to negotiate your way out of debt and save the business.

Often, arrangements can be made to cover the payment of debts over a longer period, allowing your business to continue to trade.

Please contact us for a confidential and no-obligation discussion regarding various business rescues that are available.

Do not wait for a winding-up petition.

Fill in the contact sheet to start resolving your issues; negotiating with the HMRC now!

Further, Help

Sources of help and advice available:

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