A pattern Insolvency Practitioners regularly see is that directors often wait until HMRC begins formal enforcement before seeking advice. That might be an enforcement notice or, more commonly, a winding-up petition. At that stage, options are more limited, stress is high, and the situation can quickly feel overwhelming.
The key message is you don’t have to wait for HMRC to take action before speaking to someone. In fact, the earlier advice is sought, the more solutions are available, and in many cases, the company’s position can still be stabilised.
Why HMRC Pressure Starts Quietly Then Escalates Quickly
It’s common, especially in today’s economic climate, for companies to fall behind on PAYE, VAT, or Corporation Tax. Often, when cashflow is tight, companies focus on covering wages, rent, and suppliers hoping the situation with HMRC will resolve itself in time.
Initially, HMRC may seem patient – a few letters or calls. But once the arrears reach a certain level, or a payment arrangement fails, they can act swiftly and firmly in the following ways:
- Taking control of company assets (distraint)
- Issuing a winding-up petition
- In rare cases, pursuing personal liability where misconduct is involved
By the time this happens, directors often feel boxed in, however earlier engagement could have provided a far more manageable route forward for the company.
What Can Be Done Before It Gets to That Point?
The positive news is that HMRC is often willing to engage, particularly when approached by a licensed insolvency practitioner with a clear and realistic plan. Depending on the company’s circumstances, several options may be available:
Time to Pay Arrangement (TTP)
A formal plan allowing tax debts to be paid in instalments over a set period often 6 to 12 months.
Company Voluntary Arrangement (CVA)
For companies that are viable in the long term but facing short-term difficulties, a CVA allows continued trading while restructuring debts through a formal creditor payment plan, often 36 to 60 months including those owed to HMRC.
Administration
Used when a company is under significant pressure, administration provides legal protection from creditors (including HMRC) while a rescue or restructuring plan is explored. This can preserve business value and jobs.
Creditors’ Voluntary Liquidation (CVL)
If the company can no longer trade viably, a CVL allows for an orderly wind-down and brings any enforcement action to a halt.
Pre-Insolvency Advice and Business Review
Even before any formal steps are taken, reviewing the financial position and seeking early advice can prevent unnecessary panic and provide recovery options.
Final Thought
Seeking early advice doesn’t mean committing to liquidation or insolvency. It’s about understanding the company’s financial position, exploring all available options, and retaining control over the next steps where possible.
If your company is struggling with HMRC arrears, don’t wait for enforcement to begin. The earlier the conversation starts, the more constructive the outcome is likely to be.
If you are struggling, email today so we can have a confidential discussion and how we can help.
Manraj Mand
Director
Quantuma
Manraj.Mand@quantuma.com