What action can HMRC take if I fail to respond?

Ignoring HMRC or neglecting to respond to their inquiries regarding your financial matters may result in penalties. HMRC could issue an enforcement notice, notifying you of a scheduled visit from HMRC officers or independent bailiffs. Alternatively, HMRC might issue a statutory demand, and ignoring it could potentially force the closure of your company.


What action can HMRC take if you fail to comply?

When HMRC gets in touch, it’s crucial not to overlook their communication but to respond promptly to address any issues or problems before they escalate. Ignoring them will result in continued efforts by HMRC to elicit a response, and the delay can exacerbate your situation.

Whether it’s a penalty notice, a reminder to settle your tax bill or a simple request for information, HMRC wields substantial authority and enforcement powers. Failing to respond could potentially spell the end for your business.


When might HMRC contact you?

HMRC may reach out to you for a response via phone or in writing, or to alert you that action is required for a particular issue.

Here are a few possible situations:

  • Neglecting to submit your company’s tax return or other mandatory documentation.
  • Failing to file your accounts.
  • Inadequate maintenance of proper business records.
  • Late payment or non-payment of the company’s tax bill.
  • Persisting with trading when aware of your company’s insolvency.
  • Not furnishing a security bond when requested.

Ignoring HMRC can place you and your company in a challenging situation. They can promptly take action if they suspect insolvency or deliberate non-responsiveness.


What happens if you ignore HMRC?

HMRC possesses extensive powers to enforce their decisions and requests. These usually entail penalties and other financial sanctions against your company, and potentially personal liability for you and fellow directors, leading to the closure of your company.

I. Financial penalties

HMRC operates a strict penalty system for companies that fail to comply with rules and regulations, and they enforce it promptly. For instance, if you miss a tax payment by just one day, your company will incur a £100 penalty.

II. HMRC enforcement officers

Receiving an Enforcement Notice from HMRC indicates their intention to dispatch bailiffs for the recovery of business assets equal to the debt value. These officials could be either HMRC officers or independent bailiffs appointed by HMRC, and their primary objective is to establish a Controlled Goods Agreement.

III. Enforcement action

HMRC’s enforcement office may issue a 21-day statutory demand to your company. If the demand goes unpaid or is ignored, it is likely to be succeeded by a winding-up petition. You then have just seven days to prevent compulsory liquidation for your company and must act swiftly.

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Don’t ignore contact from HMRC

I. HMRC Time to Pay arrangement

HMRC acknowledges that certain businesses face temporary cash flow challenges and may genuinely struggle to settle their tax bill on time. If they deem the company viable and see no deliberate evasion, negotiations for an extension may be possible.

A Time to Pay arrangement, or TTP, is a payment plan usually spanning three to six months, enabling you to clear arrears without additional late payment penalties. Failure to make a payment or disregard of their communications, however, may lead to HMRC seeking a court order to wind up your company.


II. Obtaining professional help

Disregarding reminders and other communication from HMRC can result in prompt action against you. Even if you later resolve the issue, your unresponsiveness will be recorded and may adversely impact your future transactions.

HMRC could interpret your lack of response as a deliberate refusal to address the situation, or worse, suspect tax avoidance or tax evasion. Ignoring HMRC not only poses tangible problems for your company but also jeopardises your future relationship with them.

Vanguard Insolvency holds extensive experience in engaging with HMRC and comprehends their operational systems. We offer invaluable guidance on effective communication and negotiation with HMRC, and can represent you if required.

For more information, please contact one of our licensed insolvency practitioners. With a wide network of offices across the country, we provide free same-day consultations to swiftly address any issues. 

David Jackson MD
Senior Partner at Vanguard Insolvency Practitioners | Website

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.