In the event that your company faces challenges in meeting its VAT obligations, there are several avenues for assistance. HMRC is committed to supporting businesses grappling with VAT or other tax liabilities. They may consider implementing a Time to Pay (TTP) arrangement to facilitate the repayment of outstanding amounts. Alternatively, if your VAT arrears are only one aspect of your company’s overall unmanageable debt, it may be more suitable to explore formal insolvency solutions.

Is my accountant’s miscalculation of my VAT return sufficient reason to avoid payment? Even if you’ve entrusted your company’s financial and tax matters to an accountant, it’s important to remember that, as the director, you bear ultimate responsibility for the accuracy of any submitted accounts or returns. Therefore, if your accountant’s error results in a substantial VAT bill to rectify previous underpayments or mistakes, it remains your obligation to ensure payment. An accounting mistake doesn’t serve as a valid justification for neglecting or delaying the settlement of your outstanding VAT liability.

What occurs if my company cannot meet its VAT obligations? In situations where occasional delays in payment are a possibility, it’s important to address the issue proactively. However, if you recognize that your company’s financial position won’t allow for settling VAT arrears and maintaining tax compliance in the foreseeable future, it becomes necessary to establish a formal plan.

HMRC permits companies to resolve their tax arrears by implementing a series of monthly installments, provided they believe the company has a realistic chance of repaying the debt within a reasonable timeframe. This arrangement, known as a Time to Pay (TTP) agreement, typically has a maximum duration of 12 months. HMRC often prefers shorter-term TTPs, usually spanning 3 to 6 months.

Persistent failure to meet your VAT obligations can result in more severe measures, such as distraint or the potential issuance of a Winding Up Petition against your company. While HMRC is open to dialogue with businesses facing difficulties in meeting tax requirements, they won’t hesitate to take substantial action against companies that refuse to engage or are unwilling to seek a viable resolution.