HMRC Tax Arrears Advice
Understand overdue tax, prioritise the next steps and assess whether repayment or a wider restructuring review is needed.
Start by checking the tax position
List the taxes owed, the periods covered and the payment dates. Reconcile the figures with HMRC correspondence and check whether penalties, interest or missing returns are part of the balance. An accurate starting figure matters before making promises about repayments.
Further reading: HMRC guidance on unpaid tax.
Tax arrears may be a temporary timing issue, but they can also indicate that trading no longer generates enough cash. The company needs a review of its overall creditors, not just the most recent HMRC demand.
Match the response to the stage reached
For an early cash shortfall, a supported payment proposal may be appropriate. Where HMRC has issued enforcement correspondence, identify the deadline and what action is threatened. A winding-up petition is a court process and requires urgent attention.
We help directors organise the information needed to assess affordability and compare a Time to Pay proposal with wider rescue or closure options. Do not ignore correspondence while waiting for a customer to pay or a finance application to be approved.
Prevent the balance from growing
A sustainable plan includes new VAT, payroll and other tax liabilities. Check cash reserves at each tax date and consider whether prices, margins or payment terms need attention. If the company cannot meet current liabilities as well as repayments, a formal insolvency review may be needed.
Start with the facts
Bring a current picture of debts, assets, cash flow and any creditor deadlines.
- Latest accounts and bank balances
- HMRC and supplier arrears
- Court papers or enforcement notices
- A short cash-flow forecast
Questions about your options
Contact HMRC as soon as you know payment will be difficult. Have the figures and a realistic explanation ready.
Bring the records up to date with your accountant so the liability and any proposal are based on accurate information.
Depending on the circumstances, HMRC may use debt collection, enforcement or court action, including seeking to wind up a company. Respond promptly and check the stage reached before relying on repayment discussions.
Review the wider financial position rather than promising unaffordable instalments. Rescue, a formal restructuring process or company closure may need assessment alongside the tax position.
Let’s talk about your next step
Tell us what is happening. We will help you understand the information needed to assess your options.