When a company is insolvent, it is often HM Revenue and Customs (HMRC) that is the creditor owed the largest amount at any one time. This is partly because tax can be collected by them in relation to so many things as far as a company is concerned.
Tax debt usually refers to one or more of the following being outstanding: –
Unfortunately, when a company is struggling financially, it is the taxman that tends to be kept waiting and ignored. This is not a good practise to adopt because HMRC has far reaching powers to help them collect what a company owes them including using a bailiff to take possession of the company’s assets and, in the most serious of situations, the issuing of a winding-up order leading to the company ceasing to trade.
Therefore, it is important that should your company be encountering financial difficulties, a dialogue is opened and maintained with HMRC. Experience shows that in doing so you are more likely to be able to resolve matters with them to the satisfaction of all parties.
As a result of contacting them at an early stage i.e. preferably before the liability is due to be paid, you will probably discover that they are flexible with you in relation to agreeing a repayment schedule to clear the company’s tax arrears over a period of time that is affordable. This is often referred to as a “Time to Pay” arrangement.
If you feel that you require assistance in your dealings with HMRC then an Insolvency Practitioner is well placed to help as he or she is going to have experience of dealing with them on a regular basis. It would be preferable if this involvement commenced at an early stage in your discussions with HMRC but if it has got to a point that they have commenced legal action then other options may be more suitable such as a voluntary arrangement or liquidation. Again, an Insolvency Practitioner can advice you in this respect.
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