If you operate a business that is encountering tax debt issues, it is important not to panic and to seek appropriate and timely advice. Some of the most vulnerable businesses are owner-managed without the capacity to renegotiate its tax liabilities.
Key to managing tax affairs properly is to submit accurate tax returns on time. Tax debts can quickly accrue with a resultant strain on cash flow and the ability of a business to continue to trade if not properly managed.
Doing nothing will only worsen tax debt issues as HMRC have the power and regularly impose fines and take debt recovery action including the seizure of assets and the possible winding up of the business.
Fortunately there is help and advice available and steps can be taken to lessen the impact of tax debt on your business.
Don't Ignore tax debt
Open an active and informative dialogue with HMRC if they are pursuing your business for unpaid. Ignoring issues will only escalate recovery action and incur additional interest.
Register for tax as soon as possible
New business often put off registering with HMRC if required to do so on the assumption that tax liabilities will not commence.
Failure to do so can result in tax penalties being levied. It is important to establish the business tax requirements and anticipated liabilities at the earliest opportunity so they can be factored into the cash flow projections.
Pay tax on time
Timely and accurate preparation of tax returns and adhering to payment deadlines will prevent the issue of interest charges and penalties, enabling the business to maximise available cash flow.
Put money aside for tax
It may sound obvious, but making provision to pay any tax liabilities due will avoid cash flow crises and will negate the need to utilise funds at short notice to the detriment of the successful operation of the business.