In all cases, HMRC stressed that it wants to work with taxpayers to find a way for them to pay off their tax debt as quickly as possible, and in an affordable way for them. This includes affordable payment options, such as Time to Pay payment plans, where taxpayers pay what they owe in affordable instalments.
During these reviews, HMRC will look at the overall financial position of the business, including the cost of repaying any Covid-19 related lending, including ounce back loans or other financial support.
Where a business has a tax debt and does not get in touch with HMRC to pay or seek support, the tax authority said it would ‘take a cautious approach in pursuing debt enforcement action. The presence of a government backed loan/finance would not prevent us from taking debt collection activity, even where that activity may result in pursuing a business towards insolvency. We only take this action as a last resort and take great care to use our enforcement powers fairly and carefully’.
The temporary measures introduced by the Corporate Insolvency and Governance Act 2020 (CIGA) which have prevented the use of winding up petitions, will end in September 2021. As the moratorium comes to an end, creditors will again be able to issue winding up petitions.
This may lead some companies to restructure their finances through an administration or company voluntary arrangement (CVA), where HMRC may be a creditor. In its public statement on voluntary arrangements, HMRC made it clear that it would support proposals that are fair to all creditors.
