If you’re a UK-based, limited company director who is experiencing some problems with HMRC right now, this one’s for you. In this blog, we’re letting you know 4 mistakes UK directors are making with HMRC.
Mistakes UK directors are making with HMRC
Not putting your returns in on time
You’re expected to pay HMRC a range of business expenses, such as PAYE, corporation tax and VAT. You can get into as much trouble, if not more trouble, by not filing returns as you can for not paying the returns that you’re filing.
Ignoring HMRC notices
It’s never a good idea to enter ostrich mode and ignore HMRC when they notify you. This might include not responding to letters or not answering the phone. The next step after this involves HMRC sending an enforcement agent out to speak to you in person.
Please listen to us when we say that the HMRC are not that bad and scary. They are just another human being at the end of the phone; speak to them and tell them what’s going on.
You’ll already know from experience that it’s better to keep people updated rather than ignore them until they take further action. If you keep the HMRC updated, they’ll be less likely to turn up at your property or work when staff members are around.
Keep the communication open, even if it means you have to say, ‘I’m sorry, but I can’t pay you at the moment, I’ll check in again next month’.
Directors agreeing to deals that they’re never going to stick to
You may have heard of a time-to-pay arrangement. This is when a director calls HMRC and says, ‘I can’t pay my corporation tax, VAT or my PAYE.’ At this point, you can request a time-to-pay arrangement. This is where HMRC will place all of the debt into one pot, and you’ll agree to pay it back over a period of time.
Two years is usually the absolute maximum that HMRC will give you. Generally speaking, they will want it within 12 months. In some cases, the HMRC may ask for the money to be paid within three months or six months, and directors often feel obligated to say yes.
If you agree to a time-to-pay arrangement and then default on it, the enforcement will start again on a much tougher level. Please don’t agree to timeframes with HMRC if you don’t think you can stick to them. Instead, ask them for more time in the first instance.
Not taking advice early
We had a call from a director earlier in the week who was issued a winding-up order. It’s never a good idea to wait until things get to the winding-up stage before seeking advice. The minute that you start struggling to pay HMRC, or you’re breaking your time-to-pay arrangement, or the enforcement agent is at your door, you must take advice early. The sooner you take advice, the better chance you have of a better outcome for you and HMRC.
We hope this blog has been useful on mistakes UK directors are making with HMRC. If you need some advice, please don’t hesitate to give us a call.
I'm Chris Worden, Managing Director at 1st Business Rescue. With over 7 years of experience, I help UK directors navigate the complex world of UK corporate insolvency. We offer free and independent advice to UK directors and advise them about what options may be available to them if their limited company starts to struggle.
I am passionate about helping other directors overcome their business challenges and get back on their feet, as I was once in the same position as them. I had a business that became insolvent, and the advice out there was confusing and overwhelming. I am here to provide honest and valuable advice to UK directors.
I am proud to say that we are one of the only 5-star corporate insolvency companies on Trustpilot with hundreds of 5-star reviews, and we publish videos weekly on our YouTube channel. Our channel is designed to educate UK directors about insolvency and debt advice. Check it out here: