Negotiating with HMRC over Outstanding Debt: Tips for Directors.

All my clients seem to have outstanding debts with HMRC.

Post Covid the sums are larger and older than ever before. Effectively negotiating with HMRC is a crucial skill. Here’s MY concise guide on how to handle this process-

1. Understanding Your Debt: Begin by comprehensively assessing the nature and amount of your outstanding debt to HMRC. Organise all relevant documents to gain a clear perspective.

2. Initate early Contact: Don’t delay – reach out to HMRC as soon as you realise you can’t meet your tax obligations in full. Early communication proves your commitment to resolving the issue and gives more flexible solutions.

3. Evaluate Your Finances: HMRC will want to understand your current financial standing. Prepare a detailed financial statement. This data is essential for HMRC to determine an appropriate repayment plan.

4. Propose a Time to Pay (TTP) Plan: A TTP arrangement enables you to settle your debt through manageable installments over an extended period. When suggesting a plan, be realistic about what you can afford, and be prepared to provide evidence of your financial situation.

5. Support Your Case: Back your TTP or any other arrangement proposal with supporting documents. This might include a commercial “pitch”.

6. Address Penalties and Interest: In some cases, HMRC may be open to reducing or waiving penalties and interest charges. Discuss this aspect during negotiations, especially if you can demonstrate that external factors contributed to your financial challenges.

7. Seek Professional Guidance: Most times you will need at least some help from Advisors like RESOLVE . If your situation is complex or you’re uncertain about negotiation strategies or writing your “pitch” our expertise can be invaluable in exploring your options. We are experts and will work cost effectively.

8. Maintain Open Communication: Keep the lines of communication open with HMRC throughout the negotiation process. Failure to communicate may lead to more stringent actions.

9. Patience and Persistence: Negotiating with HMRC can be time-consuming. Reduce your emotion. Document all communication and agreements made during the negotiation process.

10. Adhere to Agreements: Once you and HMRC reach an agreement, ensure you adhere to the agreed terms and make payments on time. Failing to meet these terms could result in legal proceedings. HMRC have a lot of legal weapons.

Remember, HMRC’s primary objective is debt recovery, BUT it’s based on your financial circumstances. There must be a WIN : WIN. They don’t want you to fail - they want your future tax payments.

Your “pitch to HMRC“ is massively improved by using Expert advice. You may only have one chance of reaching a manageable resolution with HMRC - don’t waste it.

Call or PM for an initial free Expert consultation.

Andrew Pepper - Head of Restructuring at Resolve