The 2024 Autumn Budget: HMRC gears up for increased scrutiny

The 2024 Autumn Budget unveiled a comprehensive package aimed at bolstering HMRC’s capabilities. At the forefront of these measures is an overhaul of HMRC’s IT systems, specifically designed to improve their debt management processes and ensure tax debt enquiries are addressed more efficiently.

This technological revamp is complemented by a substantial increase in human resources. The budget allocates funds to recruit an additional 5,000 compliance staff and reach a force of 1,800 debt management employees. 

What does this mean for UK businesses?

In this new set up, it’s crucial for business owners to prioritise tax compliance and address any outstanding tax issues. 

These announced measures will undoubtedly enhance HMRC’s ability to identify and pursue non-compliance more effectively. Delays or attempts to evade tax obligations will likely be met with swifter responses and potential penalties.

The increase in dedicated debt management staff shows HMRC’s commitment to recovering outstanding tax debts more quickly. Businesses struggling with tax liabilities may face increased pressure and potentially escalating consequences if they’re not proactive in dealing with their obligations.

What’s HMRC’s debt management process?

HMRC’s approach to debt management typically involves several stages, starting with formal notices to pay, progressing to reminders and final demands, and ultimately leading to legal action if the debt remains unresolved. 

Where necessary, HMRC may assign field officers to negotiate payment plans or take enforcement measures, including asset seizures or insolvency proceedings.

This systematic approach highlights the importance of timely and proactive engagement with HMRC. Businesses with tax liabilities should seek professional support, as engaging early can help prevent the escalation of penalties and other serious consequences. This is where we come in.

How can a licensed insolvency practitioner help with tax debt?

Early intervention is key to mitigating the potential consequences of tax debt. Our team successfully deal with HMRC tax debt management on a daily basis, providing invaluable guidance and support. Our experienced professionals have in-depth knowledge of HMRC’s procedures and can help you develop an effective strategy to resolve your tax liabilities efficiently and compliantly.

We work closely with you to assess your situation, identify the root causes of your tax challenges and develop a tailored plan to address them. Whether it’s negotiating favourable repayment terms, exploring settlement opportunities, or representing you in communications with HMRC, our experts can help you navigate the complexities with confidence.

HMRC Time to Pay arrangements

Exploring Time to Pay arrangements (TTPs) can provide a lifeline if you’re struggling with tax debt. TTPs offer a structured repayment plan negotiated with HMRC, allowing you to spread your tax payments over an agreed period and alleviating the immediate financial burden. However, securing a favourable TTP requires more than just agreeing to pay a fixed amount. 

HMRC doesn’t always take into account your other commitments or other outgoings. This can make the payments just as unaffordable as they currently are – or put you into debt in other areas. The repayment period is also usually 12 months or less. Which really doesn’t give you much breathing space. 

Company Voluntary Arrangement as tax debt solution

An alternative to a TTP is a Company Voluntary Arrangement (CVA). A CVA is a legally binding agreement between a company and its creditors, including HMRC, to repay outstanding debts over an agreed period – which can be anything up to five years. This provides real room for the business to restructure and continue trading while repaying its debts in a manageable way.

FTS Recovery’s team of experienced insolvency practitioners can evaluate a business’s specific circumstances and recommend the most suitable debt resolution option. They will guide the business through the process, ensuring compliance with legal requirements and negotiating with creditors to reach a fair and sustainable agreement.

Using a pre-pack administration for unaffordable HMRC debt

A pre-pack administration can offer a way to transfer the assets of your business into a new entity, leaving the debts in the old company. This can be especially beneficial if you’re hoping to maintain your operations and save jobs. 

This is how we recently had success using pre-pack administration in the face of over £1.1million in unpaid tax debts. 

Project IT

Regain control over your tax debt

Don’t let tax debt overwhelm you. Take the first step towards resolving your tax issues by contacting our team for a free, no-obligation consultation. We’ll provide personalised advice and guidance, helping you develop a comprehensive strategy to address your tax debt effectively and efficiently.

Talk to us on 01908 754666 Or find the details of your local FTS Recovery experts.