What is HMRC Debt Management?
If you are running a business in the United Kingdom, then you should have a clear knowledge of HMRC and HMRC debt management to keep your business running smoothly. HMRC- HM Revenue and Customs is the tax, payments, and custom authority of the UK. The department collects the money paid by the organizations and spends the collected money on different public service activities. HMRC also has a DMB- Debt Management and Banking Department that works to recover debts owned by taxpayers. Under the debt management process, HMRC has the legal rights to collect debts from corporates well as individuals.
The limited companies who have not paid their tax should immediately contact the department to prevent the situation of liquidating a company. In general, if a limited company fails to pay the debts, HMRC can appoint a professional liquidator to wind up the company and sell the assets to recover the debts. Do you know this is a major reason behind limited company insolvency?
However, before you can contact the department to discuss your debt recovery, it will be better for you to talk to an expert first. The experts, generally, have years of experience in the process of HMRC debt management and can suggest some effective repayment plans for your company. You should always approach HMRC in the right way, and you must have a clear understanding of how to effectively negotiate your repayment to enjoy better results. And this is where an expert can help you out.
Different actions that HMRC can take against a company
If a company refuses or is unable to repay the debt, or fails to manage the time to pay arrangement, then there are different types of actions that the department can take, including the limited company insolvency. However, some of the common actions are:
Applying for a CCJ
Failure to meet the CCJ- County Court Judgement can lead a limited company to deal with serious consequences. In fact, it can put your business properties and home at risk if the department applies for a Charging Order.
Issuing a court summons
If the HMRC has sent you a court summons, then you will have to attend that with all the required details along with your personal and business finance details. Then a repayment plan will be created and will have to follow that. If you fail to follow the plan, you can face more court appearances, or you may deal with the Liquidating a Company situation.
They can initiate a bankruptcy proceeding
If your total debt is more than £5,000, HMRC can announce your company as bankrupt. After that, HMRC can take over the assets you own. Then the department will sell the assets to settle the debts. During bankruptcy, you can’t hold the position of directorship, and this will severely affect your credit rating.
So, it is important to understand everything about HMRC debt management and try to resolve the issues as soon as possible to avoid such a devastating situation. If required, you can take an expert’s help who will guide you in this.