HMRC bill


If a company is experiencing cash-flow problems, resulting in difficulty paying PAYE it’s time for action. A pro-active approach and clear communication with HMRC will strengthen their faith in your company, any negotiations and, proposals moving forward.

What will Happen?

Once a missed or late payment has been detected by HMRC’s electronic systems it will send an automated letter to the company. This initial letter documents the reason for this communication and the action required by the company, typically the immediate payment of any outstanding debts.

Left unanswered, HMRC will then progress with the next steps in the process, issuing penalty fines for the late/missed payments. These penalties are calculated as a percentage of the outstanding debt, depending on the number of defaulted payments within a single tax year. This percent ranges from 1% to 4% of the total debt for that tax month.

Continually ignoring communication from HMRC will only add to the pressures you may be feeling as a company. Time is one of your greatest assets when experiencing financial difficulties and accessing help at the right moment can help your business survive these difficult times. If you have concerns about your businesses ability to meet financial obligations speak to us as early as you can. Our helpful, expert team will assess your unique circumstances, offering practical tailored advice to help your business.

What can I do?

There are two primary processes considered when a company is in HMRC arrears which it fears it cannot pay.

Propose a CVA (Company Voluntary Agreement)

This is a payment proposal established as a collaborative effort between the company and their appointed Insolvency Practitioner (IP). This is submitted to the relevant creditors as a formal contract in which the company agrees to fulfill any debts within a period of 5 years (maximum). The downside to this recovery method is that creditors must agree to the proposal and the clauses within it in by a majority (75%+) Providing the creditors agree to the CVA proposal the company can continue trading with the knowledge that financial obligations are addressed appropriately, relieving the stressors of financial uncertainty.

TTP (Time to Pay Arrangement)

TTP Arrangements are a viable solution to HMRC debts. In order to secure one of these, the company will have to prepare a strong case for its ability to maintain regular payments over a period of 12 months as well as other tax obligations due within this period.

If your company has a poor record with HMRC or has demonstrated a reliance on TTP arrangements in the past this may impact your eligibility.

Will I be Liable for Debts?

In instances where HMRC has evidence to suggest company directors have intentionally neglected the companies tax responsibilities, they can issue a Personal Liability Notice (PLN). These notices allow HMRC to pursue the Directors for full liability if they believe that there has been misconduct.

If you have received any communications from HMRC and are concerned about your company’s financial state, get in touch with us as soon as possible. We are experienced in HMRC negotiations and the processes which enable companies to survive.