Do you remember, not that long ago, when HMRC were providing grants to struggling businesses and allowing you to spread the payment of your various taxes. It is starting to feel like a distant memory.
This week we have seen two examples of the new approach.
First, the gloves are certainly off in the arena of debt collection. HMRC are starting to come down hard on businesses still struggling to get back on their feet, who have HMRC debt, even if they are not that far behind. It is becoming clear that HMRC wants your cash and sooner rather than later. It seems inevitable that we will now see a spike in HMRC led insolvencies. I remember seeing all the statutory notices in the Press & Journal around 12 years ago, following the financial crisis of the previous couple of years.
Secondly, we are now seeing HMRC move to close what it sees as flagrant abuses of the system. Reports are surfacing of various companies being targeted. These are accountants and others who HMRC think operate as the providers of Manages Service Company services, principally to contractors, in a bid to circumnavigate IR35. Although HMRC are targeting the providers, the tax liabilities will ultimately fall on their clients, and that could be you, if you use the services of such a company. The tax liabilities look as though they may only go back 4 years, but that could still be a nasty shock to your savings, assuming you have any after the last couple of years.
HMRC are investing heavily in debt management resources so you can expect them to be proactive in the collection of tax arrears of any description. Expect the conversation to be firm but polite and not paying up, is unlikely to be an option. We hear that call waiting times for people trying to make Time to Pay Arrangements with HMRC are increasing as so many people, following a scary call from an HMRC hitman, dive for the security of a repayment schedule.
So, what advice can we give you if you are worried about your outstanding HMRC debts. Firstly, don’t panic. There are a few simple strategies you can use including:
1 Just start paying something every week or month against the debt. Not only does it show a willing ness to pay, but it also means the balance is constantly changing, and hopefully in a downward direction. You don’t need to agree this with HMRC, just do it.
2. Contact HMRC to make a Time to Pay Arrangement. It is s good idea to be able to pay something up front but not essential. However, if you fail to keep up the payments, HMRC may demand repayment in full. You also must keep on top of your current taxes as they fall due.
3. If you are worried about future self-assessment tax liabilities you can set up a regular budget plan on the HMRC website.
4. Come and speak to us. We have been dealing with these sorts of issues for a long time. We can also put you in touch with an insolvency specialist if you have finally run out of options.
If you have an issue then it is better to take action now, rather than leave it until HMRC contact you, which may see the whole matter escalated and out of your hands. So, don’t delay.
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Alan E Long
The Long Partnership