When faced with correspondence from HMRC all owners/managers of companies and businesses should not ignore it as a lack of response can have serious consequences.
HMRC are perhaps the creditor with the most resources and best set-up to take immediate enforcement action against you in the event of a failure to account for tax liabilities and/or non-payment.
From experience, even the failure to file consequential VAT Returns can lead to enforcement action.
What responsibilities does a company or business have?
Primarily, all companies and businesses have a statutory duty to account for all taxes due to HMRC. This can include all conventional direct taxes - mainly payroll taxes (PAYE/NIC), VAT and Corporation Tax – and also taxes falling due on indirect income, including (but not limited to) underpayments as set out under IR35, undisclosed or disguised remuneration, loan charges and charges due on Director’s Loans.
Accounting for tax requires that you maintain proper accounting records (which for companies is a statutory requirement under the Companies Act 2006) and regularly file returns and make payments of the amounts due on such returns, in accordance with the return payment deadline. For VAT, this is commonly on a monthly or quarterly basis and, for PAYE/NIC, this is usually on a monthly basis via the Real Time Information (“RTI”) software.
Corporation Tax requires less month to month maintenance, with requirements to file and pay within a 9-10 month period after the year-end, but the tax liability may well be sizeable and should be provided for as part of good corporate governance.
What Other Risks Do I face?
If you have disclosed any tax schemes you are a party to, or have any ongoing tax investigations, then your tax liability may be uncertain and, even if such claims are disputed, you are at risk of an Accelerated Payment Notice being served.
A Director of a company facing such risks bears fiduciary duties of trust and confidence, to act within their statutory fiduciary powers which also, where such liabilities threaten the company’s liquidity, include acting in creditors’ interests (the largest creditor usually being HMRC). By ignoring the liabilities to HMRC, even in insolvency there are considerable risks faced by Directors.
However, in the unfortunate event that you do find yourself in circumstances where you are facing enforcement by HMRC for VAT Security, APNs, Loan Charges or (and more commonly) for outstanding PAYE/NIC or VAT then early engagement is critical and your options are as follows:
- Negotiating with HMRC
- Time to pay agreements
- Restructuring your debts
- HMRC tribunal appeals
- Defending legal proceedings
- Claims against tax advisers
At Francis Wilks & Jones we have considerable experience dealing with HMRC and assisting all businesses and Directors with the above matters, particularly where you or your company are facing insolvency proceedings.
Please call any member of our Tax Disputes Team for your free consultation now on 0207 841 0390. Alternatively email us with your query at email@example.com and we will call you back at a time convenient for you.