I can’t pay HMRC!

I can’t pay HMRC a client’s partner told me, “I won’t remortgage the house to repay company debts”. How many times have insolvency advisers heard that one! It is natural to want to protect the family home. After all, isn’t that one of the main reasons that we work hard. When an HMRC tax debt starts to build up the pressure increases.  Heads go fuzzy and thoughts whirl around with no solid plans formulated.  This leads to inertia.  Then an HMRC winding up petition focuses the attention again.

The Family home is already exposed

In many cases, protecting the family home may be too late. If a company has bank borrowings with associated guarantees then the home is at risk. If there are leases for rental of premises or machinery protected with guarantees then the front door of the home is wide open.  So when a winding up petition lands on the doormat, it may be time to be logical and remortgage the home and be your own banker. You can even receive a second income by doing this. Call Directors Circle to discuss this further on 0333 050 8518.

HMRC Winding up Petition

The HMRC Winding up Petition has been a rare sight over the last few quarters. The Government placed a partial restriction on their use  in 2020 due to Covid-19.  But they are set to start up again after Spring 2021.  It will be a slow roll-out with historic pre-pandemic HMRC tax debt heading up the queue. According to the Orian think tank, an estimated 65% of the SME business sector has significant HMRC tax debt that could not be repaid over one year. That is even if trade was at the 2019 level.  Out of the 65% – half of that percentage will face an HMRC Winding up Petition, which is two million companies.

Where do we go from here?

With such a large number of potential company failures in the SME sector, there has to be Government intervention. The options are a further hold on HMRC winding up petitions or more likely, an insolvency protection initiative controlled by the Government that limits the requirement to pay more than 10% of all historic debts per year. This would flatten the insolvency curve and allow economic repair. So maybe  – don’t remortgage the house to repay company debts because logic has gone out of the window during this pandemic!