Tax debt, government lending schemes and Company Voluntary Arrangements (CVAs)
Published 15 July 2021
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Our approach
As the UK emerges from the pandemic and economic activity resumes, we are taking an understanding and supportive approach to dealing with those who have tax debts or are concerned about their ability to pay their tax.
We are aware that many customers are worried as the financial support schemes start to wind down and we want to offer practical support wherever we can. At all times, we will take an understanding and supportive approach to dealing with those who have tax debts or are concerned about their ability to pay their tax.
In all cases, we want to work with customers to find a way for them to pay off their tax debt as quickly as possible, and in an affordable way for them. Everyone is different, so the support we offer varies from customer to customer. For instance, we can discuss affordable payment options, such as a payment plan (called Time to Pay), where customers pay what they owe in affordable instalments.
We will do everything we can to help businesses with temporary cash-flow issues to survive, but where they have little chance of recovery, we do have a responsibility to act. It is in no one’s interests to simply allow unsustainable debt to build up unchecked.
More information is available about how we’ll collect tax debts as we emerge from coronavirus (COVID-19).
Government lending schemes
Government have introduced a flexible range of lending opportunities, for businesses, by way of the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), and the recently announced Recovery Loan Scheme, which is still available.
These schemes are administered by the finance industry, who are responsible for managing repayment of these loans and will be expected to take necessary action to recover the loan amounts, should an agreement fail.
Where businesses have borrowed from one of the lending schemes, we expect businesses to take all practical steps, including drawing on the full range of financial support and opportunities available to them, to keep up to date with their tax payments. This includes making the most of the flexibilities contained in the various government lending schemes, for example, six-month repayment holidays, or extending repayment terms.
Where businesses need more time to pay their tax, we will continue to take a flexible approach to Time to Pay, providing businesses with bespoke affordable payment plans following a review of their financial affairs.
During this review, we will look at the overall financial position of the business, including the cost of repaying any COVID-19 related lending, including BBLS, CBILS or other financial support. We expect businesses to be able to keep up with future tax liabilities as they arise and will make sure payment plans are affordable to take them into account.
Where a business has a tax debt and does not get in touch with us to pay or seek support, we will take a cautious approach in pursuing debt enforcement action. The presence of a government backed loan/ finance would not prevent us from taking debt collection activity, even where that activity may result in pursuing a business towards insolvency. We only take this action as a last resort, and take great care to use our enforcement powers fairly and carefully
In summary, our approach is to continue to support viable businesses where we can, making sure they are accessing the support available to help businesses cover their liabilities as they recover from the economic disruption of the pandemic.
Company Voluntary Arrangements (CVAs)
The temporary measures introduced by the Corporate Insolvency and Governance Act 2020 (CIGA) which have prevented the use of winding up petitions, will end in September 2021. As the moratorium comes to an end, creditors will again be able to issue winding up petitions.
This may lead some companies to restructure their finances through an administration or CVA, where we may be a creditor. In our public statement on voluntary arrangements, we make it clear that we will support proposals that are fair to all creditors. We will also ensure that we adopt a commercial approach when we review proposals.
It is important that businesses engage with us at an early stage if there is a specific proposal under CVA that could rescue a business.
Where businesses are worried about making tax payments, we’re here to help, and they should call the dedicated Payment Support Service as soon as possible.