It can be unsettling for any business owner, director or SME to deal with claims from HMRC. Our team of experts led by lawyer and accountant Stephen Downie, can help whatever the enquiry. It also boasts Andy Lynch, with 18 years experience working at HMRC's special investigations team to draw on. Don't settle for second best. Call us today.
Our tax disputes team are able to assist your business when faced with a dispute with Her Majesty Revenue and Customs (HMRC) regarding accounting for business taxes or enforcement by HMRC, whether against your business or individuals personally.
Tax arrears are one of the biggest triggers for insolvency of small companies in England and Wales and HMRC is often the largest creditor in the majority of company insolvencies. In our experience these arrears are often caused by the indirect or delayed nature of most tax liabilities. Not everyone’s business is structured in a way which ensures taxes due are properly reserved for. The law makes it clear that every director is expected to be competent enough to ensure that such legal obligations are met. Ignorance is no excuse.
- the obligation to pay sums due to HMRC is very different to the demands of an unsecured trade creditor who will (or should) very quickly let you if you are in arrears and may withhold supply of goods or services and press for early payment.
- this lack of immediate enforcement and the reliance on the tax payer being sufficiently organised means some directors prioritise payment to other unsecured creditors and not HMRC.
If you do find yourselves in a dispute with HMRC, there is often much which can be done to either defend or mitigated the worst effects of the claims. Our expert team can help with the following situations
“FWJ did precisely what it set out to do. I am extremely grateful for its assistance.”
A client who had received a Request for Security from HMRC for a sum that would have caused their company severe financial difficulties. We helped them to have the entire bill withdrawn
Disguised remuneration schemes or an Accelerated Payment Notice
Disguised remuneration schemes or an Accelerated Payment Notices are a particular specialism at Francis Wilks & Jones.
Businesses, company directors, employees and relatives of company directors who have participated in a disguised remuneration scheme (such as an Employee Benefit Trust (“EBT”) or an Employee Financed Retirement Benefit Schemes (“EFRBS”)) are increasingly finding themselves under investigation by HMRC. Whether or not HMRC have already made contact, this can be a worrying time given the ongoing changes in legislation, the tightening of government policy in this area, the application of the loan charge and the potential for liquidators’ claims against directors who participated in a disguised remuneration scheme.
One thing is clear, this is an area where it is better to take advice sooner rather than later. Whether you have received monies from an EBT and would like to understand your position before HMRC make contact, have received an accelerated payment notice or a Regulation 80 Determination, or have been contacted by a liquidator in relation to a potential claim, our team can advise you regarding your liability, your options and the best strategy to adopt.
PAYE or VAT security notices
A PAYE or VAT security notice can be very serious for a business.
In the majority of Company insolvencies, HMRC are owed VAT and PAYE. Where a director or individual has had previous business failures in which HMRC were left unpaid and where HMRC suspect this failure to account may be repeated, HMRC may request that security be given to reduce HMRC’s exposure to further bad debt. The requirement to pay a cash deposit as security for VAT or PAYE can significantly impact a Company’s cashflow. However, non-payment of a VAT or PAYE security notice is a criminal offence and can lead to a fine. It is therefore vital that you take early advice and act within the timeframes set down by HMRC. We are experienced in advising Companies and directors of their options when in receipt of PAYE and VAT security notices.
Personal liability notices
Personal liability notices can be a shock to any former director or manager of a business.
Where an individual is linked to a company that owes HMRC money for unpaid National Insurance Contributions, HMRC may issue a personal liability notice transferring the company’s liability for the unpaid contributions, to the individual. Notices will be issued if HMRC believe that there has been a deliberate non-payment of National Insurance Contributions. This is a further option available to HMRC to address taxation fraud. Non-payment of a personal liability notice can result in recovery action by HMRC. Early advice is therefore advisable.
Tax Disclosures and Investigations
Tax disclosures and investigations have increased dramatically over the past twenty years as significant steps have been taken to combat tax fraud and tax evasion. The reduction in tax receipts to HMRC, as a result of an increased participation in schemes aimed at avoiding payment of taxes, has led to significant changes in policy, legislation and enforcement options for HMRC.
- a company or individual who has underpaid tax, can make use of HMRC’s voluntary disclosure facilities;
- tax payers who make a voluntary disclosure do so with a view to reaching an agreement with HMRC for payment of unpaid taxes;
- where an agreement can be reached via a disclosure facility, a tax payer will normally avoid a criminal prosecution and receive lower penalties than those that would have been applied following a HMRC Enquiry.
If HMRC do instigate an investigation in to non-payment of taxes, HMRC will do so with a view to assessing whether there has been an underpayment or overpayment of taxes and whether there has been deliberate wrong doing on the part of the tax payer. We would recommend that a tax payer work closely with their accountant during an investigation, co-operate with HMRC and take legal advice early where deliberate steps have been taken to avoid payment of taxes.
The loan charge
The loan charge was a charge introduced, by the Finance Act (No.2) 2017, on loans considered to represent Disguised Remuneration Schemes. The introduction of the loan charge was a further step by government to clamp down on tax avoidance and the losses to HMRC caused by unpaid PAYE.
The loan charge creates a PAYE liability for a business that has participated in a Disguised Remuneration Scheme. This can create cashflow concerns for a business, where faced with a sizeable PAYE debt flowing from the loan charge. A Company should take early advice surrounding the options available to it.
Time to pay arrangement
Where a business is unable to pay its tax liability it can seek to agree a time to pay arrangement with HMRC.
Where agreed, this will allow the business to repay the tax due (normally VAT, PAYE or Corporation Tax) over an agreed period (usually 3-6 months, but this can be extended to 12 months in certain circumstances).
- a time to pay arrangement is intended to be a “one off” option for a business facing cashflow difficulties;
- this is because where a time to pay arrangement is agreed, the business will also need to pay any future trading tax liabilities that accrue during the term of the time to pay arrangement.
- business owners should take advice regarding whether HMRC are likely to agree a time to pay arrangement given its trading history and circumstances and whether this is going to be sufficient to allow the business to continue to trade long term.
Company owners should avoid entering in to a time to pay arrangement where it looks likely that the Company will be unable to pay future tax obligations. This is because doing so can, in certain circumstances, increase a director’s personal liability.
Advice should be taken by directors of the options available to the business given the debt and potential time to pay arrangement. A director should also take advice personally to identify the extent of any risk to them personally, where the business enter in to a time to pay arrangement with HMRC.
Dealing with tax affairs
Any business might find itself having to deal with unexpected tax enquiries.
Once tax falls into arrears, your business will face ever increasing competition as you will continue to face the requirement to provide for ongoing tax demands in addition to making arrangements to repay tax arrears.
There are a number of tools available to you if you act early on. The risk of insolvency increases if a dispute with HMRC is ignored and not proactively addressed. At Francis Wilks & Jones we do not seek to advise you on all forms of taxation, which is the province of a company’s accountant, but we will address the problems you or your business faces when dealing with claims by HMRC.
Should you require any assistance, please contact our expert tax dispute and director services team who would be happy to discuss your matter with you. Don’t delay. Speak to an expert today.