Here at Dunion & Co. we get approached on a regular basis by directors in respect of company tax debts, yet beneath a temporary blip there is an otherwise profitable business. It is common for a director to think that because they have problems with tax arrears, the business must go into administration or liquidation before HMRC takes matters into its own hands. The fact is that HMRC do not enjoy winding up companies or exercising other available collection methods. Enforcement procedures are generally used as a last resort or where there is reason to believe recovery of their liability is at risk.
When a business has a temporary cash flow problem HMRC, will consider reaching a time to pay agreement. The Business Payment Support Service was set up in November 2008 and can grant additional time to pay for all forms of taxation arrears. However, this is not a tool to defer taxation liabilities indefinitely but a method of supporting viable businesses that are suffering short term cash flow difficulties and are designed to help businesses get back on their feet.
It goes without saying that the Business Payment Support Service is looking for the shortest period necessary for payment and will generally not consider anything longer than 12 months. For those businesses with tax liabilities in excess of £1 million the taxman will also require that an independent review is undertaken by a qualified professional adviser, such as an insolvency practitioner.