Company HMRC debt: VAT, PAYE and tax arrears

Unpaid tax is the most common reason UK companies end up in formal insolvency, and HMRC presents more winding-up petitions than any other creditor. Company tax arrears usually build up across VAT, PAYE and National Insurance, and Corporation Tax. HMRC has strong powers: it can issue a statutory demand, present a winding-up petition, use enforcement by taking control of goods, and in some cases make directors personally liable, for example through a Personal Liability Notice for unpaid National Insurance or where there is evidence of deliberate behaviour. The good news is that HMRC would usually rather be paid over time than force a company under, so a realistic Time to Pay arrangement, typically up to 12 months, is often available if you engage early and honestly. Ignoring HMRC is the single worst option. If the arrears are unaffordable, a practitioner can explain rescue or closure routes before HMRC escalates. HMRC; gov.uk Time to Pay

This is time sensitive. If you have been served a demand or petition, options narrow fast. Speak to a Licensed Insolvency Practitioner today.

Key facts

Biggest petitioner: HMRC presents the most winding-up petitions of any creditor
Where it builds: VAT, PAYE and National Insurance, and Corporation Tax
HMRC powers: Statutory demand, petition, taking control of goods
Personal risk: Possible for some PAYE/NIC debts or deliberate behaviour
The opening: A realistic Time to Pay arrangement, usually up to 12 months

Engage early, before enforcement

HMRC is far more flexible before it escalates. A Time to Pay arrangement spreads the debt if you can show the company can afford it. Use our Time to Pay affordability calculator to see what is realistic before you call them.

When the arrears are unaffordable

If you cannot pay even over time, a CVA may let you keep trading while clearing historic tax debt, or a CVL may be the right close. The worst path is silence, which leads to a petition.

Common questions

Can I be personally liable for company tax debt?

Usually no, but there are exceptions: HMRC can issue Personal Liability Notices for some unpaid National Insurance, and pursue directors where there is evidence of fraud or deliberate default. Take advice if you are worried.

Will HMRC agree to Time to Pay?

Often yes if you engage early and the plan is realistic and affordable, usually over up to 12 months. It helps to know your numbers first, which is what our affordability tool is for.

What is a statutory demand from HMRC?

A formal demand for a debt, usually giving 21 days to pay before HMRC can petition to wind the company up. It is a serious warning to get advice immediately.

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Company HMRC debt: VAT, PAYE and tax arrears. Unpaid tax is the most common reason UK companies end up in formal insolvency, and HMRC presents more winding-up petitions than any other creditor. Company tax arrears usually build up across VAT, PAYE and National Insurance, and Corporation Tax. HMRC has strong powers: it can issue a statutory demand, present a winding-up petition, use enforcement by taking control of goods, and in some cases make directors personally liable, for example through a Personal Liability Notice for unpaid National Insurance or where there is evidence of deliberate behaviour. The good news is that HMRC would usually rather be paid over time than force a company under, so a realistic Time to Pay arrangement, typically up to 12 months, is often available if you engage early and honestly. Ignoring HMRC is the single worst option. If the arrears are unaffordable, a practitioner can explain rescue or closure routes before HMRC escalates.

Speak to a Licensed Insolvency Practitioner

Tell us briefly what is happening and we will arrange a free, confidential, no obligation call with a Licensed Insolvency Practitioner. The earlier you get advice, the more options you usually have.

Free, confidential and no obligation. We are an independent information service and introduce directors to a Licensed Insolvency Practitioner. This is general information, not regulated advice.