Dealing with tax affairs

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Tax Affairs & Corporation Tax Fraud

When faced with correspondence from HMRC all owners / managers of companies and businesses should not ignore it. A lack of response can have serious consequences and in our experience, taking early advice and being proactive with HMRC, often results in a much better outcome.

• HMRC, as a creditor, are well resourced and set-up to take immediate enforcement action 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.

Enforcement action by HMRC can lead to the winding up of a company, bankruptcy of an individual or a demand for security on account of future tax liabilities which can render a business unable to trade.

What responsibilities does a company or business have?

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
• 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;
• 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 or application of a loan charge.

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.

Options available

However, in the unfortunate event that you do find yourself in circumstances where you are facing enforcement by HMRC for PAYE or 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 debts;
• HMRC tribunal appeals;
• claims against tax advisers;

“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 withdraw

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. Should you require any assistance, please contact our tax disputes team who can discuss such matters with you.