Dealing with HMRC on tax debt

The best case scenario when dealing with bills from HMRC is to pay them in full in a timely manner, to avoid problems later on. However, should business owners find themselves in a position where they owe HMRC money and are receiving letters about it, one of the key pieces of advice we would give is to not ignore the problem – it certainly won’t go away and if anything, ignoring it will make things worse.

We have great experience in helping our clients in situations such as this, where we can speak directly to the correct people within HMRC on a client’s behalf and negotiate payment terms.

Whether we conduct the initial call or the business owner speaks directly to HMRC, the questions that will most likely be asked are whether they can borrow from the bank, whether there are any savings that could be used or whether family and friends could be a source of lending to pay off the debt.

Sometimes, they may suggest that wages are reduced in order to create funds to pay the debt, and whether any other type of funding can be explored.

Of course, if there is any way to pay off the debt by any of the aforementioned ways then it is usually in the best interests to do so. In the event that funds can’t be raised, then the next best thing is to try and negotiate a payment plan, usually instalments over an extended period. Whilst there is never a guarantee that HMRC will agree to this, it is worth asking and can provide a real lifeline where cash flow might be stilted.

As long as there is no past unpaid debt or other debt outstanding with HMRC, they can be open to more flexible payments terms. The best way to put this into place is via a standing order. However, it is most important to stick to the agreed plan and ensure funds are available to pay at the correct time. Interest can be added onto the debt and it can quickly become a bigger problem.

We can help clients demonstrate that they need an extended period of time to settle a debt, with the right information about their circumstances, which will aid any application for payment terms. There could be valid extenuating circumstances for the business and it is worth identifying and highlighting these, as they can be leveraged with HMRC.

Having a tax debt can be very stressful and sometimes businesses aren’t sure where to turn. Dealing with HMRC can be a daunting prospect, so in cases where clients need some extra support and a helping hand, Adams Moore is always happy to step in and help – just part of our forward thinking accountancy services.