HMRC tax arrears?

Company Debt

If your company has outstanding Corporation, VAT, PAYE or CIS tax, your first step should be to contact HMRC immediately and apprise them of the situation. Be prepared to describe your situation to them in detail (current financial figures and projections etc). Using your figures they will review the situation to see whether a "Time to Pay Arrangement" can be agreed.

HMRC will usually in the first instance look to see whether the entire debt can be settled within a twelve month period, though they may be willing to agree a longer period in some circumstances. It is important to ensure that the payments are manageable and are met on time, otherwise HMRC will cancel the agreement and are unlikely to grant a new one.

Personal/Sole-Trader Self Assessment Debt

If you cannot settle your Self Assessment bill in full, but you could settle it in instalments. HMRC have an online process  that will let you establish a monthly instalment plan. You must owe £30,000 or less, have no other HMRC debt, and the due date of payment must be no later than 60 days prior. Otherwise, this will no longer be an option.

If all else fails

If you cannot come to an arrangement with HMRC, then a formal insolvency procedure may be required, such as either an Individual Voluntary Arrangement (IVA - for personal/sole trader debt) or Company Voluntary Arrangement (CVA - for limited company debt) which can result in a lower final debt being negotiated.

If you have amassed a lot of debt however and you cannot see a way to repay even a small percentage of it over a reasonable timescale, a more involved insolvency process may be required, such as bankruptcy (for individuals) or administration/liquidation (for companies).