READ TIME: 11 Minutes
John A Waller
Reviewed: September 7th, 2021
Negotiating With HMRC
HBG Advisory, as licensed insolvency practitioners, is here to help negotiate with HMRC – Inland Revenue Debt.
The HM Revenue and Customs have vast resources to recover unpaid tax. It is essential to prioritise HMRC Debt.
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 need to safeguard your position as a director and the company’s creditors.
Paying debts to HMRC, whether VAT, PAYE, Corporation Tax, on time is essential for every business. Failure to do so is a sign of insolvency and can lead to action against the company and you as a director for wrongful trading in insolvency. For options therefore paying HMRC, please read ‘options paying PAYE HMRC arrears‘.
However, do not create a head in the sand moment.
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. Failure to do so can however 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 charged.
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 there are any “soft” options. You need to be honest about the cash flow issue you have and how you can make good 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, then do not expect much support unless you can demonstrate extraordinary circumstances for this repeat issue.
Avoid a winding-up order (Winding up petition) or having to consider corporate insolvency like a “Creditors Voluntary Liquidation CVL” by taking early preventative action now!
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;
- You fail to pay by the payment date, and therefore receive an HMRC payment demand, threatening possibly notice of intent to commence an action to recover tax owed legally.
HMRC debt management support
Owing any sort of tax to HMRC is however a worry. Dealing with 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 ant 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 the HM Revenue and Customs (HMRC) for you. Options are your accountant, tax specialist, tax lawyer, trusted friend or experienced relative.
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 requiring help with your Self Assessment return, call the HMRC. Ensure you are with the person nominated to help you when you call. The HMRC will confirm their identity and check you’re willing for them to represent you.
An appointed agent can be:
- A qualified accountant or tax adviser
- An experienced friend or relative
- A member of a voluntary organisation
The HMRC has a standard for agents 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 logging onto the VAT online services.
Additionally, you may authorise a person to act as 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 personal tax account;
- Prepare a claim for a tax refund payable to you.
However, you are still legally liable for paying your own tax.
Authorise a friend, relative or voluntary organisation to act as an intermediary
If you are unable to pay the tax due to ill health or do not speak or understand English, arrange a person to interpret your dealings with the HMRC for you. 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
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
If you missed the payment deadline and have already received a letter from HMRC threatening legal action, you then must contact that HMRC office.
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 it difficult to pay, and the reasons why?
- What you’ve done to try to get the money to pay the bill;
- How much you can pay immediately and how long you may 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 you’re 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.
In more complex cases, HMRC may ask for proof before they make a decision.
HMRC may allow you time to pay your debt, also known as TTP (Time To Pay) Arrangement.
If agreed, HMRC will assess what you can pay now and then how much over what period, usually by Direct Debit on dates agreed. You will be liable to interest on the late payments.
If you begin negotiating a Time To Pay with HMRC, you must keep those payments up to date. Otherwise, it is likely to be cancelled and immediate legal action issued.
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 Sunaks says this is to be waived while the pandemic exists.
If worried about not paying the HMRC, this should be your first option to resolve matters. If you are worried, call HBG Advisory for immediate help.
The HMRC has set up a new helpline for business owners.
HMRC Coronavirus Helpline Telephone: 0800 015 9559
Only agree to Installments You Actually Can Pay.
When talking to HMRC, only agree on a monthly amount you can afford. Do not be pressured to decide on an amount that 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 a month or so later, you fail to meet the arranged payment. Credibility with HMRC remains important.
Take time to understand your ongoing cash flow, and be honest and perhaps conservative in your figures, ensuring AFFORDABILITY.
Ensure your genuine thoughts and cash flow are honest, and the HMRC are with you on your arrangement and informed. You usually only have one chance. So professional advice is important and ranks with credibility with HMRC. HBG Advisory can assist in this, as our team has many years of experience dealing with HMRC.
The HMRC wants you to take matters seriously. Remember they control our public money, and they 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 its receipt.
HMRC Tax Help?
PAYE/N.I. Pay Your Tax Bill Problems?
Limited companies 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. Notable VAT arrears, can mean insolvency? Therefore, this may prompt HMRC to investigate the company’s tax affairs.
What you can do: VAT Arrears requires 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 rate of tax: 19%.
The HMRC claim 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 finding tax money later.
When this happens, the HMRC uses the same collection strategy to collect outstanding corporation tax – they will issue fines, and as such, the debt can increase substantially. So, it is essential to look for advice quickly and arrange a Time to Pay arrangement failing, which consults a licensed insolvency practitioner for further information.
Negotiating with The HMRC. – HMRC’s Powers To Secure Overdue Tax.
HMRC are 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, the 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. Legally, 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.
But you are not alone. 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 6 months. We have experience in negotiation that could help you.
Directors of Accountability & Joint Liability.
Directors and LLP members are jointly and severally responsible for specific tax debts unpaid.
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 are jointly and severally liable for the business’s unpaid tax.
This Bill prevents individuals from profiting while operating an avoidance or evasion scheme while entering a process of insolvency of their business.
For a Joint Liability Notice to be issued, five requirements are therefore required before the HMRC can issue.
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 either was responsible for the conduct of the company/LLP, enabled it or benefited from it.
There is a ‘serious possibility some or all that tax will not be paid.
Changes to the rules will help HMRC benefit from issuing a Joint Liability Notice when persons are serial insolvency offenders and do not pay tax.
Negotiating With The HMRC – Targeting Phoenixism in the UK.
Three conditions are required before any notice:
Any previous companies became insolvent and had tax owing to HMRC.
If a person is connected to two or more companies, which undergo an insolvency process within a five-year term.
And if any person was combined to a company which operates the trading of any insolvent companies
Changes will tag tax liabilities for periods once the above Bill has Royal Assent.
Negotiating With The HMRC – Does HMRC Ever Write Off Debt?
Having an owner-managed business means your business will be registered with HMRC as a trading entity. Whether you are a limited company, LLP or sole trader, the HMRC has a responsibility to seek tax dues.
The HMRC are focused and time-sensitive when collecting outstanding debt to the crown. They will persist until paid, and may, even if your business fails, chase you if any misfeasance is proven.
If your business faces financial pressures and still trades, then the only option is to pay the tax owed—failing, which may worsen perhaps past resolution.
The culture of the HMRC does not write off tax owed unless beyond collection.
If you ignore the tax owed, you will find 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 while insolvent.
So if under threat, seek help from an insolvency practitioner to help 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 trade.
Please contact us for a confidential and no-obligation discussion regarding various business rescues available.
Do not wait for a winding-up petition.
Fill in the contact sheet for the start of resolving your issues, negotiating with the HMRC now!
Need help with the Directors Redundancy Claim. Please check out information on the Redundancy Claim.
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