The tax debt fell from £22.5 billion to £15.4 billion between March 2010 and January 2013. This is a thirty percent reduction in just 2 and a half years.
How have HMRC achieved this massive reduction in the outstanding tax debt? HMRC have tightened the Time to Pay arrangements, despite the politicians saying the opposite. The timescales have been much reduced.
Time to Pay arrangements are still available but they are subject to a greater degree of scrutiny. The emphasis for the greater scrutiny of the Time to Pay proposal are:
- Are your tax returns up to date, so the true liability is known.
- Your give a clear explanation of how the Time to Pay will work and be of advantage to HMRC. e.g. Saving a number of jobs.
- The proposal must be realistic backed up by credible forecasts. i.e. a mini business plan.
- If possible, a lump sum as an up front payment.
We suggest that all communications are clear and all agreements are recorded in writing so there is no misunderstandings.
On going liabilities MUST be paid as they fall due, and as shown in the forecasts.
HMRC will look for shorter periods. 3 to 6 months rather than a number of years.
The key to dealing with HMRC is early engagement. Once the collection process has started it is virtually impossible to stop.
HMRC are adopting more robust debt collection methods such as Charging Orders and Distraint. In the case of distraint, there were 4,746 cases in 2012 compared with 2,401 cases in 2011.
What is a Distraint Notice by HMRC?
Distraint is where HMRC has the power to take your business assets and sell them at auction in settlement of an unpaid tax bill. HMRC has used its powers of distraint to seize business assets – 4,746 times to collect VAT in 2012. This represents a 98% increase on the 2,401 times it used these powers to recover overdue VAT in 2011.
We can help you with negotiating with HMRC and with preparing the information you will need to go into the negotiation.
For more information please contact Edward Tudor at firstname.lastname@example.org or call on 01483 453733