Important: This guidance relates to company insolvency in England and Wales.

HMRC Debt Problems? What UK Directors Should Do Next

If your company owes HMRC and cannot pay, you are not alone. This page explains what HMRC may do next, your risks as a director, and the options available to you.

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Is this your situation?

• VAT, PAYE or Corporation Tax is overdue
• HMRC is sending letters or demands
• You are struggling to keep up with payments
• You are worried about enforcement or legal action

What this means

HMRC is often one of the largest creditors when a company is in financial distress. If debts are not addressed, HMRC may escalate quickly, including issuing statutory demands or pursuing a winding-up petition.

Your options

Time to Pay Arrangement

An agreement with HMRC to repay debt over time, if the business is viable.

Company Voluntary Arrangement (CVA)

A formal agreement to restructure and repay debts while continuing to trade.

Administration or Liquidation

Used when recovery is not possible or creditor pressure becomes too high.

What happens next

1. Review HMRC position and outstanding debt
2. Assess business viability
3. Consider repayment or restructuring options
4. Take action before enforcement escalates
5. Speak to a professional if needed

Important: HMRC can move quickly. Ignoring debt can lead to legal action, including winding-up petitions.

Common questions

Can HMRC close my company?

Yes, HMRC can petition to wind up your company if debts remain unpaid.

Can I negotiate with HMRC?

In some cases, yes, especially if the business is viable and communication is early.

Is HMRC more aggressive than other creditors?

Often yes. HMRC has structured escalation processes and can act quickly.

Understand your situation

Answer a few questions to see where you stand and what options may be available.

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