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Published: 5th March 2020
When a company cannot pay its VAT liability on time, a penalty is applied by HMRC. Unfortunately, this only compounds an unstable financial position, so it is crucial for directors to take action quickly to address the situation.
HMRC should be contacted as soon as it is known that the company will default. This places them in a more favourable light with HMRC, who might be more open to arranging a solution without further significant penalties.
Directors should contact HMRC as soon as they realise the company cannot pay. HMRC will be more open to negotiations, and may agree a Time to Pay arrangement (TTP) offering a payment extension of several months.
They will want to know the reason why the company cannot pay its VAT bill, whether any immediate payment can be made, and the steps that directors intend to take to improve the company’s cash flow situation.
It is advisable to obtain professional help when formulating a plan for extra time to pay, as this will provide reassurance to HMRC that the company can afford the proposed repayments.
Time to Pay arrangements are only offered to companies experiencing temporary financial setback, and all of the tax owed must be repaid. If HMRC believe the company is insolvent or approaching insolvency, they are more likely to take swift legal action to recover the arrears.
Call our Confidential Advice Line. Calls to this number are free of charge.
Call us now...We invite you to come and discuss your enquiry with us at your convenience.
Request a meeting...Call our Confidential Advice Line. Calls to this number are free of charge.
Call us now...We invite you to come and discuss your enquiry with us at your convenience.
Request a meeting...Call our Confidential Advice Line. Calls to this number are free of charge.
Call us now...We invite you to come and discuss your enquiry with us at your convenience.
Request a meeting...