One of the most common creditors of companies who are struggling financially is HMRC. Falling behind on tax payments such as PAYE or VAT will usually be one of the first signs that a business is experiencing cash flow problems.
If you cannot pay your taxes on time, it is crucial not to just ignore the problem. The digital tax system is quick to flag up late payers and HMRC know that missing a payment can often signal insolvency.
There is support available, however, if you ask for it as soon as possible. One option is a Time to Pay (TTP) arrangement which allows you to pay your debt back to HMRC in monthly instalments, usually over a period of up to 12 months but sometimes this can be agreed for up to two years. This can give you the necessary breathing space to get back on track.
How does it work?
A TTP is not automatic. It needs to be negotiated and agreed with HMRC. You will be given a telephone interview with them but you will also need to put your case in writing and to produce a repayment offer with copies of your cash flow. They will be looking for evidence that you will be able to meet whatever new deadline is proposed so it is important to be realistic about what you will be able to afford to repay each month.
HMRC will make a decision based on:
- the long-term viability of your company
- the likely success of your TTP plan
- the alternatives available should you be unable to keep to the agreement.
If you are successful, it does not reduce the total amount owed but simply breaks the amount into instalments so that you can clear the balance. You will avoid the late payment penalties but you will still be charged interest on the amount of tax owing.
How we can help
Many people find the thought of dealing with HMRC a daunting prospect. For us, though, it is a matter of routine. We can help you to prepare for your interview or we can contact HMRC and liaise with them on your behalf. We have years of experience in negotiating successful TTP arrangements.
However, we will thoroughly assess your company’s financial situation and if a TTP arrangement does not seem the best course of action we can suggest other sources of funding.
You may have other creditors in addition to HMRC, such as suppliers, landlords, banks and other financial providers and landlords. We can help you deal with pressure from this type of creditor too but an alternative plan may be necessary.
If your company is struggling with tax liabilities and you would like a free, confidential discussion, contact our team here or call us on 0161 474 0920.