Could there be anything worse than that fatal knock on the door? HMRC have turned up and they’re after money you owe, or they’re threatening to take your assets and shut down your business.
We always recommend that your cashflow is set up so that you are paying off money that you owe on a monthly basis, to each of the relevant entities that you’re obliged to pay… but, if for whatever reason this isn’t the case, this blog is to help educate you about what to do in that scary situation.
In our near 10 year history we’ve heard of some business owners who are in a complete panic when HMRC Field Force Officers visit their premises.
Our advice has always been the same: Stay calm.
Before you give into any demands, take a breather and go through these 3 steps:
Set Up A Realistic Payment Plan
It’s always worth trying to explain if you have already put forward a proposed payment plan with HMRC that isn’t in effect yet. Sometimes these things get lost in the system, and Field Force Officers are sent out to your premises without all of the relevant up to date information.
If you do owe money though – it’s key that you are honest about what you can afford to pay off in your payment plan. After all if you owe HMRC money, then you should pay them.
It makes no sense for either party to agree to a payment plan that your business can’t afford – if you agree to a payment plan that you know will leave your business in ruin and can’t, honestly pay: then they’ll shut you down and not get the money they are owed.
Obviously HMRC don’t want this… They want a deal where you can pay them the money you owe.
That’s why setting up a realistic payment plan is a great indicator that HMRC will get their money – which will go a long way in stopping them from shutting down your business. Intent to pay is everything!
HMRC normally want a debt cleared in no longer than 12 months – and anything longer isn’t deemed ‘realistic’. So bare this in mind when suggesting your affordable payment plan.
Sometimes an affordable one off payment to HMRC, whilst the field force officer is on site, is possible and is also a good indication of intent to pay. This can then buy you some breathing space whilst you are working out an affordable payment plan for the remaining balance.
Understand Which Assets They Can Take
You need to be clear about which assets HMRC can take if they do ever knock on your door.
If any of your assets are leased, you don’t technically own them. This means that HMRC’s debt collectors can’t take them – as somebody else owns them.
Make sure you have relevant proof and documentation for this – as it’s important that the HMRC debt collector has evidence about which assets they can legally seize.
Call Your Accountant
If you don’t feel confident conversing with the Field Force Officer yourself, give your accountant a call to be a go between with HMRC and the Field Force Officer in question.
Normally, those on the other end of the phone in the HMRC offices are happy to talk to your accountant, who will have all of your information in place, and can check their systems for any payment plans you have proposed that hasn’t been updated on the system yet.
Remember – the Field Force Officer’s job is to come and collect the money, so they won’t leave until a realistic payment plan that you can honestly afford has been arranged with HMRC and communicated back to them.
Be Pro-Active And Make Progress
The key to making progress with HMRC is being pro-active about your situation. Going to them with a plan to reduce the amount owed over a reasonable amount of time shows that you are not trying to shy away from your payments.
We would also recommend keeping copies of all correspondence you send to HMRC, it is after all one of the biggest organisations in the country, and it isn’t unheard of for paperwork to be misplaced.