HMRC are less inclined to offer Time to Pay Deals but Dont panic if one has been refused

Time to Pay Programme

The most common problem we are finding with businesses is that they are running up debts with the HMRC.  The “time to pay programme”, where HMRC has allowed business to spread the cost of PAYE and VAT over time, is being tightened and we have found that where companies have had a number of time to pay deals in the past HMRC are reluctant to keep agreeing to them.  HMRC Debt management units may suddenly want the full amount paid in one hit!   So you need to take advice before it gets to this stage. 

Do not Panic

If HMRC does start to get aggressive the first thing is do not panic and do not think all is lost!    The HMRC is likely to send a letter saying that it will issue a winding up petition if the amount is not paid.  Do not ignore this letter and think that they will take 14 days to do what they say.  It is possible to propose a company voluntary arrangement or CVA that allows the company to pay off a proportion of the debt maybe 40p in the pound over 3-5 years. In addition a CVA will allow the company to exit from onerous contracts that are adversely affecting the whole of the business.  Retailers have used CVAs to close shops for the good of the group.   In order for a CVA to succeed the business must have a viable future, if some of the debt is to be written off,  and the directors must be passionate about saving the business and be prepared to change. 

As a company voluntary arrangement is a formal insolvency process the "case"  is then taken out of the hands of the enforcement department and is referred to the Voluntary Arrangement Service or VAS.   Effectively as 100% collection is now unlikely, VAS has to judge whether a CVA is a fit fair and feasible alternative to winding up.  Note the last line of the aims of the VAS as published on the HMRC website.  They WANT to help rescue viable companies!

But they need to see a viable plan for the company so that they are satisfied that tax revenues can be restored.  It is putting this plan together, overseen by our CVA experts with hundreds of CVA’s behind them that we can help you with.  We talk to the VAS almost every day.

So the answer to the question is this, VAS can agree a compromise of the debts and a partial write off of taxes owed, if the CVA is well structured, whereas the collectors and enforcement CANNOT.

For more details on the CVA process please visit this page our page on detailed CVA