When you run a business, you need to keep on top of your tax responsibilities or face legal action from HMRC plus some hefty fines if you’re not careful.
The best way to manage your responsibilities is to hire an accountant as they will be equipped with the latest information and tons of experience of dealing with your type of business. An accountant can take care of all the worry and hassle of trying to work out how to do your accounts the correct way.
It’s always important to stay on HMRC’s good side. So here are a few letters you really don’t want to receive from HMRC. If you end up receiving any, it’s important to get advice from an accountant or insolvency practitioner as soon as possible.
Overdue Corporation Tax letter
If you are a director at a limited company it is your responsibility to file accounts and report profits. Corporation Tax is usually levied at 20% and is mandatory. It should be paid on time, within 9 months of your year-end.
If you are unable to pay the tax, your company is insolvent and you should speak to a licensed insolvency practitioner (IP).
You may be able to negotiate a time-to-pay arrangement with HMRC so that you can pay your tax over a longer period of time. However, if you’ve still failed to pay, then you will receive this letter.
Overdue VAT payment letter
One of the most common reasons for company insolvency is a failure to pay VAT. If you’re struggling to pay VAT then you should speak to an Insolvency practitioner as soon as you receive one of these letters.
HMRC Objection to Company Strike Off letter
You can apply to strike off the company if your business has been dormant for three months and is no longer trading.
You can only do this if you’re up to date with tax responsibilities. If you’re not, then your application will be denied and you’ll receive this letter.
You may receive this letter even if you haven’t applied to have your company struck off. This will be if you’ve not been trading for a long time and haven’t been filing accounts.
Final Proof of Debt letter
This letter will be sent when a company is facing administration or liquidation. There are often a few creditors who will be owed money who must then appeal to the liquidator/administrator to recoup their losses. If a creditor’s claim is valid, then a Final Proof of Debt letter will be sent.
HMRC Notice Warning of Enforcement by Distraint
You will receive this letter if you have left tax debt unpaid for a long period of time. HMRC will plan to take goods to sell and use the proceeds against the outstanding debts.
After receiving this letter, you will then have seven days before an enforcement officer or bailiff is sent to your company to take possession of your assets.
HMRC Receivables Management Debt Collection/Distraint Levy
You’ll receive this letter if bailiffs have found your company property closed when they visit. The letter will inform you that they will send someone round again unless you pay the full amount of tax owed immediately. Alternatively you can see if you can negotiate an arrangement with HMRC to pay the debt over a longer period of time.
This letter is sent when a tax debt is long overdue and an enforcement office or bailiff has been sent to the company property. They will identify assets that they can sell to recoup the money. However they may leave the goods on site until HMRC consents to their removal.
In the meantime, this letter means that the goods cannot be sold or disposed of without the consent of HMRC. If you do this, this is a criminal offence. If you don’t sign this letter, the goods will be removed immediately.
HMRC Distraint Notice and Inventory Checklist
This letter will be issued after a Controlled Goods Agreement has been sent. It is a record detailing the assets a bailiff has decided will be sold to recoup losses from unpaid tax debts.
HMRC Winding Up Warning Letter
This is for when HMRC has tried almost all other means of recovering unpaid taxes from a company. If this petition is upheld by the courts, then the company will be forced into liquidation.
All assets will be sold and distributed among unpaid creditors, including HMRC. The company will then be closed permanently.
Winding up Petition letter
This is when a creditor asks the courts for a liquidation. You have seven days after receiving this letter before the petition becomes public knowledge. You will have to act immediately to stop this process from happening.
Have you ever received any of these letters and if so how did you respond? What advice would you give others? Let us know your thoughts in the comments section.
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About The Author
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.