Last week, HMRC published a policy paper announcing that it is restarting its debt collection work, as economic activity resumes. HMRC is contacting all individuals and businesses with tax liabilities, with a view to recovering the outstanding debts.

This is a reality on the ground. In week one we have seen a field force officer making contact with a client in relation to overdue liabilities. So while Minister Kwasi Kwarteng said a flexible approach will be taken with those businesses who engage and are committed to bringing their debt into a managed arrangement, if you are invisible to the Revenue, there will be no such flexibility or understanding. This is the return to normal levels of support and enforcement – the standard ‘basis of a healthy and functioning economy’.

So that’s why we are saying to businesses do the sensible thing now and start communicating with HMRC, especially those with sizeable arrears which pre-date Covid.

Here’s eight key things to consider doing:

  1. Get all your outstanding returns filed. Invisibility is the enemy.
  2. Keep in touch with contacts made at HMRC, come back to them in response to their queries in a timely manner and arrange for payment as quickly as you can.
  3. If an immediate payment is not possible, sit down with your board and advisers and agree achievable budgets, assessing how the business has traded and what you can commit to in terms of a managed payment plan. We cannot stress enough the importance of securing an affordable plan as soon as possible to head off any enforcement action.
  4. Don’t over-promise. If you fail to deliver on your managed payment plan, it is quite difficult to get another one.
  5. Don’t ignore correspondence from HMRC, especially if HMRC are looking to take control of business assets. Now is the time to engage and avoid unnecessary confrontation. HMRC will visit taxpayers who ignore the communications or refuse to pay their taxes – we have seen it already. In addition, from September 2021, the government may use its enforcement powers (including seizure of goods, summary warrants and insolvency proceedings) to collect debts from these taxpayers.
  6. Get familiar with your own numbers.  Ensure you have a good accountant and have regular  conversations with them to monitor the trading performance and financials in the business.
  7. Be aware of support available. There are plenty of experienced advisers who will help get a TTP (Time To Pay) arrangement in place which is right for you.
  8. You can sometimes get a short-term deferral, or chance to discuss other forms of support, including government-backed loans and repayment holidays. Help is also available to taxpayers from HMRC’s debt management teams and under The Debt Respite Scheme (Breathing Space).​​​​​​​

While the government promises to use its enforcement powers around tax arrears “fairly and carefully”, this latest announcement will undoubtedly concern businesses in the retail and leisure sector and many others which are still struggling as a result of the pandemic.

For more information, contact Ric Miller –  

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