HMRC Debt: Are They Chasing You?

Managing His Majesty’s Revenue and Customs (HMRC) debt can be a daunting task for business owners in the UK. HMRC arrears occur when payments are missed, leading to potential complications. As industry experts, we’re here to shed light on the following areas:

• Pay As You Earn (PAYE) arrears
• HMRC’s recovery efforts
• Personal liability for Directors
• Directors Disqualification
• HMRC Interest charges
• Time to Pay arrangements

If you find yourself struggling with these financial challenges, contacting Bell & Company can be the key to finding effective solutions.

PAYE Arrears

The amount of PAYE tax you have to pay will depend on the bracket you fall under, this can be found on the official HMRC website by clicking here. HMRC, like any other creditor, expects payments to be made on time, with monthly PAYE payments for all businesses being due on the 22nd of the month. Failure to meet these deadlines can result in interest or penalties accruing.

HMRC’s Recovery Efforts

Small Business Owners used to treat HMRC as a non-priority creditor when it came to repaying debts, but now HMRC’s approach to debt repayment has been changed. Amendments in legislation have empowered HMRC to establish their standing as preferential creditors within the context of formal insolvency occurrences. With the exception being creditors with secured claims against assets. At the same time, HMRC has become more forceful in trying to collect debts, and they’ve shown this by investing a lot in various initiatives.

Personal Liability For Directors

In an effort to enhance tax compliance and deter fraudulent activities, HMRC has undertaken a notable policy shift, wherein they have empowered themselves to impose personal liability upon directors of companies. This policy change signifies that directors can be held individually accountable for their company’s unpaid tax liabilities, including PAYE (Pay As You Earn) taxes and National Insurance contributions, particularly in situations where the company’s financial distress or insolvency has been manipulated to evade tax responsibilities. Thus, reinforcing a stricter regulatory framework and underscoring the importance for directors to diligently oversee their company’s financial matters.

If HMRC debts have accumulated within a company for over six months, directors may face disqualification and potential misfeasance charges. However, the disqualification decisions rest with insolvency authorities and not HMRC.

Additionally, winding-up petitions are becoming more prevalent in response to unpaid debts. Winding-up petitions can trigger Personal Guarantees and expose Director’s Loan Accounts. This means that the directors of the company may be personally liable for the company’s debts.

HMRC Interest Charges

HMRC interest charges refer to the monetary penalties applied to outstanding tax payments or underpaid taxes. When a taxpayer fails to make a payment on time or underestimates their tax liability, HMRC may impose interest charges as a way to compensate for the delayed payment and to incentivise timely tax compliance.

It’s important to note that HMRC interest charges can apply to various types of taxes, including income tax, corporation tax, VAT (Value Added Tax), and others. These charges are distinct from penalties, which are typically imposed as punitive measures for intentional non-compliance or more severe cases of negligence.

Time to Pay Arrangements

When facing arrears, SME business owners can opt for a Time to Pay (TTP) arrangement. However, it is essential to remember that TTP must be paid alongside ongoing payments and applies exclusively to arrears. Negotiating a TTP arrangement is not possible if a Winding-Up Petition has already been issued.

When dealing with HMRC arrears and PAYE debts, it is vital to understand that interest and penalties cannot be negotiated or settled. Most importantly, addressing these issues promptly and effectively can prevent further escalation.

What Are Your Options?

Taking proactive steps to address these issues is crucial for your company’s well-being. Bell & Company offer expert guidance, negotiation support, and personalised solutions to help you overcome these challenges.

By seeking professional assistance and understanding the intricacies of HMRC debts, you can make informed financial decisions and safeguard your business’s stability.

Contact us today on 0333 305 4331 to speak with our specialist team.