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Thursday, 30 September 2010

HMRC Time To Pay Scheme being toughened up.

Archial Architects and 1st Dental laboratories recently went into administration having had problems paying HMRC. Both companies were quoted on the AIM market and these two cases have shown that HMRC is getting tough on businesses that have arrears of tax.

The FT reported today that HMRC says there has been no change in its policy or criteria when offering companies time to pay. However, the paper carries a quote from HMRC saying that it takes “a dim view of debtors who reach agreement with us to pay their tax debts over an extended period and then fail to comply. In such cases they should expect HMRC to take firm action to recover the debt.”

At KSA Group we have had a number of companies contact us in September that have had problems with keeping up payments on a Time to Pay Deal.

We have been able to help a print finishing business in the Midlands that owes £160,000 to HMRC. A pre-pack administration was discussed by the board but a CVA is now the preferred route. A Scottish construction company with debts of £300,000 to tax man and the trade, this is a CVA. A South East based recruitment company, owed £60,000 to PAYE and VAT, again a CVA is now being proposed.

All of these business and many more that we have taken under our wing in September have one thing in common. Their TTP deal was not affordable, after bad cashflow payments were delayed under the deal and HMRC withdrew the TTP deal. Then the HMRC Enforcement and Insolvency Department issued 7 day warning letters for winding up petitions to all of them.

If you foresee any problems paying HMRC on a Time to Pay Scheme then you must ACT. If the HMRC issue a seven day letter or a winding up petition as a way of getting their money owed then your options are limited. Your bank account will be frozen once the bank knows a winding up petition has been served. Prior to a winding up petition you can enter into a CVA which HMRC will generally support. Talk to us to or visit our pages on CVAs

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