Business Debt

If you are self-employed, any money your business owes is known as a business debt. If you are a company director and have given personal guarantees on business loans then your business is liable to pay repayments, if your business fails, the repayment liability becomes your responsibility. Currently, there are two types of creditors, one who works under FCA regulation and the second who works under non-regulated financial products market.

Business debts can be a priority or non-priority
Priority creditors have stronger powers to get their money back than non-priority creditors.

Non-priority Business Debts

These include:

Priority Business Debts

These include:
Taxes are dealt with and collected by HM Revenue and Customs (HMRC). There are different types of taxes. We have listed some of them here:
Tax debts should be treated as priority debts. This is because HMRC has strong powers to collect the money from you.

For information on the rules about other types of tax, contact us for free advice.

“TTP” is an arrangement to pay your tax bill back in installments after the date it was supposed to be paid. Ask HMRC for time to pay if:

Interest and Penalties

If you send in your income tax return late or pay the debt late, penalties can be added to what you owe. HMRC will not add penalties to your debt where a time-to-pay arrangement is made before the penalties would have been applied, as long as you keep to the arrangement.

Penalties for missed Income tax filing deadline are as follows:

Penalties if you pay your income tax late are as follows:

Debt Enforcement – Business Debt

If you do not make an agreement with HMRC to repay your tax debt, your case will be transferred to the debt management office of HMRC and HMRC’s local office. The HMRC debt management office will consider different ways to collect/recover the debt from you.

Some of the actions HMRC can take are as follows:

  1. Debt Collection agency
  2. Bailiff action
  3. County Court Judgement and bankruptcy proceedings
  4. Direct payment collection from your business and personal bank account
  5. Magistrate court action
  6. Use of Field collects officers
If you are no longer trading but still have outstanding business and personal debts, you can call for advice about how to deal with your business debts.
If you are unhappy with the way HMRC has dealt with your case, there is a complaint procedure that you can follow. You may want to complain if you have been refused time to pay your arrears and you feel that this is unreasonable given your circumstances. You should first contact the HMRC office that has been dealing with your case. If you are not happy with the response, your complaint will usually be passed to a “complaints handler”.

For any further advice and debt solution, please call our office on 0203 318 0990.