With so many companies in the UK struggling to stay afloat during the coronavirus pandemic the government has introduced a series of measures designed to prevent them moving into insolvency. As many businesses are experiencing extreme cashflow difficulties and finding it difficult to pay creditors tax arrears can be particularly worrying.
HMRC has offered additional support to businesses during the coronavirus pandemic by extending the Time to Pay scheme. So how might this help you?
HMRC has extended access to the Time to Pay scheme to support more businesses who are affected by the coronavirus pandemic. You may be able to negotiate up to twelve months extra time to pay your corporation tax arrears offering a respite from the pressures on your working capital.
Before calling HMRC's helpline it is important to consider how much you can afford to pay. HMRC will need to know that you understand why your business cannot pay its corporation tax bill and exactly how coronavirus has influenced your ability to meet your tax liabilities. If your arrears situation started or significantly increased in February/March 2020 then you can pinpoint the lockdown as the probable cause of these cashflow struggles.
Clearly businesses in some industries such as retail and hospitality were first to be affected so it would not be surprising if you were one of these businesses and are struggling with cashflow or suffering financial distress.
HMRC are likely to ask many questions about your situation which is why professional support at this time will prove to be invaluable. That could include preparing sufficient documentary evidence to support your application or asking licensed insolvency practitioners to carry out negotiations on your behalf.
Additional funding - depending on your circumstances additional finance may be an option that allows you to pay your corporate tax bill and other debts whilst booking working capital for the future.
Company Voluntary Arrangement (CVA) - If HMRC reject an application for more time to pay tax arrears a Company Voluntary Arrangement might be an alternative. This is a legally binding instalment plan that allow for debts to be restructured and all interest/charges frozen.
If you need assistance with negotiations our specialist team at McTear Williams & Wood can help - call us on 0800 331 7417