Dealing with HMRC Debt

HMRC Debt Is Common

Tax debts to HMRC — including VAT, PAYE, and Corporation Tax — are among the most common reasons companies face insolvency. If your company owes money to HMRC, you have several options.

Option 1: Time to Pay (TTP) Arrangement

HMRC may agree to let your company pay its tax debt in instalments over an agreed period, usually 6 to 12 months.

To qualify, you typically need to:

• Be up to date with current tax filings.
• Demonstrate the company can afford the proposed payments.
• Contact HMRC early — before enforcement action begins.

Call the HMRC Business Payment Support Service on 0300 200 3835.

Option 2: Company Voluntary Arrangement (CVA)

A CVA is a binding agreement between the company and its creditors (including HMRC) to repay a proportion of debts over a set period — usually 3 to 5 years. An insolvency practitioner must supervise the arrangement.

Option 3: Administration

If the company needs breathing space from creditor action (including HMRC), administration provides a statutory moratorium. It is typically used to rescue the business or achieve a better result for creditors than immediate liquidation.

Option 4: Liquidation

If the debt cannot be repaid and the company is insolvent, a Creditors' Voluntary Liquidation (CVL) may be the most appropriate route. See our CVL guide for more detail.

Warning: Personal Liability for Tax Debt

In certain cases, HMRC can make directors personally liable for company tax debts — particularly for unpaid PAYE and National Insurance under "personal liability notices."

Next Steps

If your company owes money to HMRC, take our free assessment or contact us for confidential advice on the best route forward.