By Rob Adamson, Restructuring & Insolvency Partner, Armstrong Watson, Armstrong Watson LLP

AS the economy begins to open up again, businesses that have HMRC arrears will need to consider how to begin making repayments.

Many business owners will have taken the opportunity to defer VAT from March and June last year. HMRC has an online portal to help you manage this outstanding VAT, which closes on June 21, 2021. Interest and penalties will start to be incurred from June 30, 2021 if you have not advised them by then that you are unable to repay your VAT. Unlike VAT, there has never been an option for businesses to defer PAYE liabilities. HMRC has been clear from the outset that a condition of the Coronavirus Job Retention Scheme grant was that related PAYE tax, National Insurance Contributions and pension contributions due on wages were to be paid on time.

Whilst HMRC is currently unable to issue statutory demands and winding up petitions (this course of action is suspended until June 30, 2021), it is reminding businesses of their obligations, including, where a company is part of a Government-accredited scheme, that a failure to keep HMRC liabilities up to date may result in the company’s accreditations being withdrawn.

If you opt to commit to a Time to Pay (TTP) arrangement with HMRC, it is vital to make sure it is affordable. One of the common themes, when we see businesses that need to seek advice on their cash position, is that they have been over-ambitious with their TTP when negotiating with HMRC. Unfortunately, this often leads to the arrangement failing, which in turn leads to a need to use a formal process to deal with the liability.

Given these uncertain times, taking a step back and offering a TTP plan which may be prudent at the outset, but which can be reviewed once trading returns, may be better than trying to repay a significant liability in a limited time.

Although provisions may have been extended until the end of June, you shouldn’t postpone seeking advice until then. Directors’ duties have remained in place throughout the pandemic and any director whose business is facing challenges should consider getting support as soon as they can.

For help and support in making a plan to manage your repayments contact Rob Adamson on 07970 731804 or email rob.adamson@armstrongwatson.co.uk.