What action can HMRC take against companies for late tax payments?

HMRC have a number of options available to them when it comes to recovering late tax payments from UK companies. Financial penalties are applied along with interest on the outstanding amounts, but this is often just the start of a relentless HMRC debt recovery regime.

If your company has paid its VAT, PAYE, or corporation tax late, it is very important to address the situation as soon as possible. It does not necessarily mean the total tax outstanding will become due immediately, as HMRC operate an instalment plan that is offered to some companies.

Fast and open communication is, however, essential to prevent further measures being taken against your company, potentially including enforcement notices, seizure of goods, statutory demands, and ultimately a winding up petition.

Begbies Traynor can offer reliable and independent professional advice if your company is in arrears with HMRC.

Late payment penalties and interest

HMRC charge late payment penalties and interest on outstanding amounts of tax, with interest being applied on a daily basis. Penalty rates differ depending on the type of tax, but as an example, the penalty for late PAYE payments is calculated as a percentage of the amount due and increases over time.

Notice of enforcement

If payment is not made in the timescale provided, HMRC are likely to issue a notice of enforcement warning you that they intend to act under the Taking Control of Goods Regulations. This means they will seize goods to the value of the debt owed, plus the costs of bailiff services. If you receive an enforcement notice you have 14 days in which to pay or negotiate a repayment plan.

Bailiff action

HMRC enforcement agents, sometimes known as bailiffs, will visit your premises under the Taking Control of Goods Regulations and their initial visit may involve identifying goods for potential seizure. In this case you have seven days in which to pay the debt in full.

Statutory Demand

If you receive a statutory demand you have 21 days to pay the outstanding tax debt before HMRC can take further action, or 18 days to have it set aside. This could potentially lead to the issue of a winding up petition and your company being forcibly liquidated.

Winding up petition

HMRC are known to take decisive action when recovering late payments of tax, and a winding up petition is their final act of enforcement. Once a winding up petition has been issued you have a very limited time to act before it is publicly advertised, alerting your bank and other secured lenders to the situation. Your bank accounts will then be frozen leaving your company unable to trade normally and exposed to further action by other creditors.

Begbies Traynor is the largest professional services consultancy in the UK and can provide reliable, independent professional advice on HMRC late tax payments. Call one of the team to arrange a free same-day consultation – we operate from an extensive network of offices around the UK.