Help with Tax Arrears - HMRC Tax Advice

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Help with Tax Arrears

If you're struggling to make payments on your tax debt, you may find yourself needing help with tax arrears. When you receive a bill from HM Revenue and Customs (HMRC) and your company's financial situation is such that you can't meet the necessary payments, you contact them as soon as possible to make arrangements.

Communication with HMRC is the key to keeping your business running as smoothly as possible.

If you try to ignore HMRC's correspondence, HMRC will most probably take action and begin proceedings to recover the outstanding debt.

Don't Ignore HMRC's Bills

Failure to pay or acknowledge HMRC's bills will result in the following:

Distraint

  • A HMRC representative will visit your business to request payment for your outstanding debts.
  • Failure to pay will result in the HMRC representative making an itinerary of your possessions on a form.
  • If you sign the form, it's likely that nothing will be taken and you will be given five days to pay.
  • If you don't sign the form, you will still be given five days to pay, but your possessions will be taken immediately.
  • Your possessions will be taken to be auctioned to pay your tax debt plus the costs of distraint. Essential items to continue to trade will not be taken, nor will other vital assets required to continue operations.
  • If your possessions are sold for a value in excess of the amount owed, you'll be given any money that's left over, but if your possessions sell for less than the required amount, you'll be expected to make up the difference.

Magistrates Court Summons

HMRC may take magistrates court proceedings against your company if you owe £2,000 or less, or you've owed money to them for over a year.

  • A summons will be given before the hearing, stating what is owed, plus the time and place of the hearing.
  • Payment of the debt will mean you don't have to attend court.
  • Issues with the amount owed will have to be discussed with HMRC as the magistrate's court is not able to change the size of the debt.

County Court Summons

If HMRC are unable to obtain the debt through distraint or the magistrates court, county court proceedings may be put in place.

An information pack will be sent to explain your options. You will be given the chance to make an offer within 14 days to pay be a specific date or in certain installments.

Improving Cashflow

The best option to pay your tax debt is to improve your business' cashflow. There are several measures that can be taken to improve cashflow, which will also benefit your business in the long run.


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This website has been written and intended for registered limited companies in the UK only. The site contains general information and resources for limited companies only in financial trouble. Insolvency Helpline only work with limited companies to offer solutions for their business debt problems. Insolvency Helpline cannot offer help or advice any other entity except limited companies. Insolvency Helpline does not advise individuals, sole traders or partnerships seeking debt advice. If you are an individual, sole trader or partnership seeking advice, we recommend using an alternative service.

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