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If you need help understanding the best way forward for your company, we can provide confidential free initial advice. You can book a free virtual meeting or call us on 0800 612 5448.

Vat Arrears Advice and Support

If your business requires VAT arrears, advice and support. The sooner you seek help, the better.

Be assured, HMRC will not go away and will pursue the debt if you fail to act!

Arrears of VAT and not having the ability is a clear sign of Insolvency for a business.

The term “VAT” refers to ‘Value Added Tax’. HMRC collects it in the UK. However, it is the seller of goods who charges the output tax to then pay to HMRC.

HMRC does not directly charge VAT.

Value Added Tax is an indirect tax collected by the seller and then paid to HMRC minus any input it may claim.

In insolvency proceedings, HMRC falls as a unsecured creditor for any outstanding Value Added Tax owed.

The Covid-19 Pandemic and VAT Deferral Scheme.

The UK government supported businesses struggling to pay VAT. However, the VAT deferral new payment scheme has now closed

As soon as you know your business may not pay over the VAT collected, pursue professional insolvency advice provided by HBG Advisory. By doing so, you as directors may consider many options to avoid surcharges by the HMRC.

Vat Arrears Help Advice and Support – Early Action required?

Prompting early action protects you as a company director, as it demonstrates your intent to resolve matters as a company director. Failure to do so will expose you personally to your limited company’s debts, should it be proven your insufficient care damaged creditors’ interest further. As a company director, it is essential to understand your director’s duties and responsibilities.

Avoid by early action, claims of:

  • Wrongful Trading and
  • Fraudulent activity.

HMRC considers the late or non-payment seriously. Ensure you act quickly to resolve matters.

VAT Payment and Return submission 

When registered for VAT, your VAT return must be submitted, and any invoice paid by one month and seven days after the period in which it applies. For example, if VAT is payable for the quarter to 31 December, your VAT return must be submitted to HMRC, together with the payment cleared funds in HMRC’s account no later than 7 January. Failure to do so generates a daily interest of 2.75 per cent. 

So what are my options?

  1. Pay the arrears;
  2. Raise a loan on the business to pay the arrears;
  3. Arrange a Time to Pay Scheme with HMRC;
  4. Seek advice from a licensed Insolvency Practitioner and consider:

If you consider your limited company no longer viable as a going concern, you may wish to consider a:

  1. Creditors Voluntary Liquidation or
  2. Compulsory Liquidation & A Winding-up petition.

For further in-depth reading, please view Can’t pay VAT! What happens next?

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