Gareth Rusling, partner at rescue and recovery specialist Begbies Traynor in Sheffield, gives some salient advice about dealing with HM Revenue & Customs.
Every year, thousands of businesses struggle to keep up with their VAT payments.
While they may be making their PAYE and NIC payments on time and have no other outstanding bills, settling the VAT bill is often at the bottom of the list.
The company’s inability to pay may well be a temporary situation, but unless dealt with swiftly, it could force the business into insolvency.
The first thing to be aware of is that HM Revenue & Customs will pursue you if you are continually late on your taxes.
They, of course, want their money, but that is only a portion of what they will look at.
As you probably know, it is crucial to convince them that you are not insolvent and that you are not involved in wrongful trading.
Racking up bills that you have no intention or the wherewithal to pay is a serious matter in the UK.
There are several options open to you if you act quickly.
Some involve formal court proceedings while others may be accomplished informally, out of court.
If there is a way to inject capital into your business, you may wish to consider that first.
It is also possible to undergo a CVA – Company Voluntary Arrangement – which is an agreement between an insolvent company and its creditors.
CVAs typically allow insolvent companies to pay back a percentage of their debts over an extended period of time.
Payments are typically monthly and continue for several years, easing cash flow for the struggling company.
In addition, perhaps HM Revenue & Customs could be contacted to look into their Time to Pay scheme.
The key is to act quickly to show HM Revenue & Customs that your intentions are honourable and that you are making every effort to act responsibly. To delay would be the gravest mistake of all and puts your business at risk.