Strategies to sustain your business amid increasing HMRC pressures

The past year has witnessed a sharp 63 per cent rise in business closures instigated by creditor petitions, predominantly from HM Revenue & Customs (HMRC).

This surge largely stems from the financial strain of managing Covid-era debts under rising interest rates, compounded by HMRC’s backlog in handling cases.

Many struggling businesses continue operating despite being unable to settle their bills, prompting creditors like suppliers, utility providers, banks, and HMRC to seek liquidation to recuperate losses.

Proactive financial management recommendations

Given these conditions, businesses must adopt a proactive approach to financial management. Steps include:

• Monitoring your financial activities, focusing on income and expenditures
• Prioritising the repayment of high-interest debts, particularly those accrued during the Covid pandemic, to alleviate financial burdens
• Maintaining open lines of communication with all creditors. If you foresee payment difficulties, negotiate for extended deadlines or more manageable repayment terms.
• Considering a Time to Pay (TTP) agreement with HMRC for tax debts, which allows for phased repayments over a mutually agreed period.
• Exploring the possibility of a Company Voluntary Agreement (CVA), which allows continued trading under creditors’ approval, or assessing other insolvency solutions like administration or voluntary liquidation as alternatives to closure.

Importance of timely debt repayment

Paying off debts promptly can prevent your business from drawing undue attention from HMRC.

Be conscious of potential delays in HMRC services that could affect your applications and ensure meticulous record-keeping of all communications to provide clarity and support audit processes.

Get expert assistance

As professional accountants, we can offer plenty of help and guide you through challenging economic times.

We provide specialised advice on managing finances and restructuring debts to ensure sustainability and compliance.

You will also find our assistance welcoming with setting up arrangements with HMRC and negotiating with creditors to secure favourable terms.

We also give you insights into financial rescue tools like CVAs and advising on suitable insolvency procedures based on your specific business situation.

Considering the economic situation, businesses should engage closely with their accountants regarding all tax and financial matters.

If you require guidance or wish to discuss your business’s financial health, please contact our team for expert assistance.