Companies that are VAT registered usually have to pay their VAT bill once every few months and they should calculate along the way how much VAT they are likely to be due to pay to HM Revenue and Customs (HMRC).
As of January 2023 companies in the UK can now get penalty points if they submit their VAT Returns late, even including nil payment returns.
The moratorium suspends all creditor legal action during a company administration to give a struggling company the time to put a rescue plan in place.
There are several exit routes out of company administration, with the right course of action determined by its individual circumstances and future viability.
If you owe money to your creditors that you can’t repay, they can take legal action against you which could potentially lead to the closure of your business.
If you’re unable to pay your staff then it’s also likely that you’re struggling to pay bills from suppliers, HMRC and other creditors when they become due, and at that point, your business could be technically insolvent.
Although negotiating a Time to Pay Arrangement with HMRC can be challenging, in many respects, this is the easy part. This is because, once the Time to Pay Arrangement is agreed, you’ll not only have to pay HMRC the money you owe in instalments over the next 6 to 12 months, but you’ll also have to pay your ongoing VAT, PAYE and corporation tax bills on top of this.
HMRC is the most common creditor for UK businesses and it’s easy to see why. When faced with a cash flow crunch, rather than not paying key suppliers that your business relies on, the easier option might be to delay a VAT or PAYE payment to HMRC. However, HMRC has enforcement powers that go beyond that of other creditors, which makes building up PAYE and VAT arrears a risky situation to be in.
I'm really worried and would like some advice please. I am the sole director of a limited company providing IT consultancy and have recently accepted a permanent job with another company starting in two weeks. My company will then become dormant. I have been naïve and silly and taken too many dividends and consequently can't pay back the corporation tax and VAT owed which totals £25,000.
HM Revenue and Customs (HMRC) has expressed concern about the use of this process known as Moneyboxing, but what is it? Begbies Traynor discusses.
Struggling to pay the VAT is a common problem for companies. In this submitted question we look to advise what steps you can take with HMRC.
In general, your home is protected by the ‘veil of incorporation’ that separates the company as an entity from you as a director.
If your company is forced into liquidation, the actions of all directors leading up to insolvency will be investigated by the liquidator.
If the stresses and strains of running a successful company have taken their toll on your physical or mental health, it might be time to step back.
When running a business, it is normal for market fluctuations and external factors to result in periods of financial pressure, which sometimes means there is not sufficient money in the bank to cover all running costs.