Is your company having trouble paying its VAT tax bill? We can help you understand your options.

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  • Provide free confidential advice.
  • Help you look at repayment plans.
  • Look at what deeper problems there could be at the company.
  • Look at restructuring or exit strategies.


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    I can’t pay my VAT tax bill to HMRC – What are my options

    Companies that earn a certain amount of money per annum, must pay their VAT bill to HMRC every quarter. If you’re struggling to pay their tax bill, there are several options that could be available to your company, from formal repayment plans, to closing up your company.

    What is VAT and how often do I have to pay it?

    Value added tax is a tax that companies in the UK pay, whose taxable turnover exceeds £85,000 in a 12-month period. The threshold means that companies must become VAT registered. Companies must return their tax return every 3 months which is paid to HMRC.

    What happens if I don’t pay it on time or cant?

    If you don’t end up paying your VAT return on time, or if you have trouble paying it all, you will be automatically issued with a default on your account, which is also known as a ‘surcharge period’. This surcharge lasts for 12 months and although you won’t be issued with a penalty fine for your first default, further problems with paying your VAT bill will see you hit with penalties. This is typically a percentage of the outstanding VAT.

    With mounting penalties it’s easy for your VAT bill to get to unmanageable levels, which can make it extremely difficult to get back to a strong financial footing.

    What if there a greater problem?

    If you don’t manage to submit your VAT bill on time, or within full, it could mean that there are deeper problems within your company. As companies have to submit their own tax returns, if you’ve had to use your VAT payment on other parts of the business, it could suggest that your company is struggling.

    If there are greater problems, not being able to pay your VAT bill could just be the tip of the iceberg. Typically, companies that are struggling to pay VAT have other creditors other than just HMRC and it could indicate that the company simply does not have the income to support their outgoings.

    Options available and how we can help

    If you’re worried about not being able to pay your VAT bill and you’re concerned about the possible consequences, it’s important to act quickly. We can help look at the finances of your business and look to see if there are deeper problems within your business, before giving you free, confidential advice on the best ways to move forward.

    Help continue to trade

    There are repayment plans possible that can help you through difficult times, with payment plans possible to both HMRC and to all your outstanding creditors.

    • Time to pay arrangement with HMRC – HMRC will allow you to make outstanding VAT payments through monthly instalments that last for 12 months.
    See more on Time to Pay Arrangements
    • Company Voluntary Arrangement – A formal repayment plan, which pools together all of your creditors and allows you to repay them in monthly instalments.
    See more on Company Voluntary Arrangements

    Close your company down and walk away

    If the problems with your VAT bill are a sign of bigger problems, and you want to close your company down, it has to be done in the correct manner through a creditors voluntary liquidation (CVL). A CVL will see your company formally closed down, with any remaining assets within the business sold, in order for you to pay off your creditors as best as possible.

    See more on Creditors Voluntary Liquidation

    Close your company down and start again

    If you believe that the company has a strong foundation and the right means of success, it is possible to close the company down and start again. This is known as a Pre-pack liquidation and allows your initial company to close, before giving you the opportunity to open a new company in the ashes, without the same level of debt. This is also known as a Phoenix Company, but there are certain regulations that must be followed.

    See more on Phoenix Company’s here

    In summary

    You must pay your VAT bill if the company’s taxable income is more than £85,000, this bill comes around every 3 months and if isn’t paid, you could face potential surcharges. There are repayment plans available to HMRC and your other creditors if you’re facing difficulties. Alternatively, if there are deeper problems within the business, you may want to consider liquidation options.

    Beverley Horton

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