HMRC Approach to Tax Debt, BBLS, CBILS and Company Voluntary Arrangements

20 July 2021 
2 minutes
Debt Recovery & Insolvency

As the UK emerges from the pandemic and economic activity resumes, HM Revenue & Customs has promised to adopt a more commercial approach when reviewing proposals for Company Voluntary Arrangements (CVAs). In a policy paper published on 15 July, HM Revenue & Customs stated that it would be taking an understanding and supportive approach to dealing with those who have tax debts or who are concerned with their ability to pay their tax, in particular given the winding down of the financial support schemes.

Payment plans are also being considered. However, HM Revenue & Customs, whilst stating that it will do everything it can to help businesses with temporary cash-flow issues, reminds us that it has a responsibility to act, not least to protect competitors and viable businesses in their supply chain but also that it is in no-one’s interest to simply allow unsustainable debt to build up unchecked.

The policy paper makes it clear that the presence of a government-backed loan/finance would not prevent it from taking debt collection activity which may result in the insolvency of that business.

Whilst it remains to be seen how this will operate in practice and what is and what is not considered a viable business, it is worthy of note that the Government announced in June that there would be a further extension in England & Wales through the summer of existing restrictions on presenting winding-up petitions until 30 September 2021 where the debts relate to the pandemic. It will be interesting to see how HM Revenue & Customs act in relation to winding up petitions following the removal of the current restrictions on those.

The full policy paper can be accessed here.

If you or your business is affected by any of these issues or require assistance, please contact our Debt Recovery & Insolvency team to discuss.

This article is for general guidance only and should not be regarded as a substitute for professional legal advice.

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