H.M. Revenue & Custom’s Treatment of Unpaid Taxes – Bridge Newland
Now you may have already been involved in negotiating repayment plans with HMRC and you may also have a good knowledge of how HMRC chases in their unpaid taxes however, as a Licensed Insolvency Practitioner, I see many instances of unpaid taxes when the periods unpaid are at their most extreme.
This blog seeks to better inform you of the noticeable changes in actions taken by HMRC to recover unpaid taxes:-
HMRC Winding Up Petitions
Recent studies show that HMRC are responsible for approximately 60% of Winding up Petitions and therefore they take a hard stance on company directors who use crown monies as an unauthorised loan. This may be more widely done by company directors in recent times as a result of the difficulties in raising finance or simply due to the economy generally however, in the event that you are placed into a formal insolvency process, unpaid taxes exceeding 12 months are considered sufficiently serious and could warrant a poor report being sent to the Insolvency Services on your conduct as a director. Therefore you should ensure that creditors are paid as and when they fall due, in the ordinary course of business.
Click on this link for full details on WINDING UP PETITIONS and how to deal with them.
HMRC Walking Possession Agreements
I believe that HMRC wish to appear more supportive to small to medium sized businesses and therefore a walking possession agreement is one process used regularly by HMRC instead of a Winding up Petition.
A walking possession agreement is where a bailiff, appointed by the court, attends the premises of the insolvent company, lists the assets of the Company and then a representative of the insolvent company must sign the list taken. This list is then considered an agreement to allow HMRC to remove the items listed (up to the value of the unpaid debt) and sell the assets to settle the unpaid debt but the assets can only be sold if the insolvent company doesn’t pay within the agreed period.
It should also be noted that once the agreement is signed the assets of the insolvent company are considered “SEIZED ”.
Care should be taken to avoid letting your taxes fall overdue to the point where this action is taken as the period to pay when visited by a bailiff can often be as little as 5 days therefore if not paid your assets will be removed, often instantly putting a stop to your trading.
Click the link for more details on the BUSINESS RECOVERY SERVICES offered to clients by Bridge Newland.
Whilst our initial advice would always be to try and agree a repayment plan (or time to pay agreement) early with HMRC, it is clear that the hard stance taken by them in recent times has made the chances of agreeing this more difficult than 12 months ago. Therefore, if you are at risk of falling further into arrears with your taxes, and you are unable to reach an agreement, please do not allow your client to risk trading until either a petition is served or walking possession is enforced on the Company, seek the professional services of Bridge Newland Limited.
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