Company HMRC debt: VAT, PAYE and tax arrears
Company tax arrears usually build up across VAT, PAYE and National Insurance, and Corporation Tax, and HMRC has strong powers to collect them. The good news is that HMRC would usually rather be paid over time than force a company under, so a realistic Time to Pay arrangement is often available if you engage early and honestly. Ignoring HMRC is the worst option. HMRC; gov.uk Time to Pay
- Frequent petitioner
- HMRC is one of the most active petitioners for company winding-up
- Where it builds
- VAT, PAYE and National Insurance, and Corporation Tax
- HMRC powers
- Statutory demand, petition, taking control of goods
- Personal risk
- Possible for some PAYE/NIC debts or deliberate behaviour
- The opening
- A realistic Time to Pay arrangement, usually up to 12 months
Talk it through, free and confidential No obligation. We review your situation and point you to the right next step.
At a glance
| HMRC step | What it means | Your move |
|---|---|---|
| Statutory demand | A formal demand, usually giving 21 days to pay | Check affordability and engage before it escalates |
| Winding-up petition | HMRC is one of the most active petitioners | Same-day advice: see the winding-up petition guide |
| Taking control of goods | Enforcement against company assets | Engage early: HMRC is far more flexible before enforcement |
| Personal Liability Notice | Possible for some unpaid National Insurance or deliberate behaviour | Take advice if you are worried about personal risk |
Engage early, before enforcement
HMRC can issue a statutory demand, present a winding-up petition, use enforcement by taking control of goods, and in some cases make directors personally liable, for example through a Personal Liability Notice for unpaid National Insurance or where there is evidence of deliberate behaviour. But it is far more flexible before it escalates. A Time to Pay arrangement spreads the debt if you can show the company can afford it. Use our Time to Pay affordability calculator to see what is realistic before you call them. If the debt has already been passed out, see the nine debt collection agencies HMRC uses and what they can and can't do, and our guide to Corporation Tax arrears for that specific tax.
When the arrears are unaffordable
The escalation ladder, in order
HMRC does not jump straight to enforcement, and knowing the order tells you how much time you actually have. Each rung is a chance to agree Time to Pay, and each one you pass makes the next harder.
- Automated reminders and statements
- Contact from an HMRC debt management team
- Referral to a named private debt collection agency (write, call, text only, no bailiff powers, no right of entry)
- Taking control of goods, starting with a formal notice of enforcement
- County court action, and direct recovery from bank accounts for larger debts
- Winding up: the last step, not the first, but one HMRC uses often
Related data
Our HMRC tax debt figures: The scale of tax debt owed to HMRC, from the National Audit Office. Every page on our data hub names its official source.
Common questions
Can I be personally liable for company tax debt?
Usually no, but there are exceptions: HMRC can issue Personal Liability Notices for some unpaid National Insurance, and pursue directors where there is evidence of fraud or deliberate default. Take advice if you are worried.
Will HMRC agree to Time to Pay?
Often yes if you engage early and the plan is realistic and affordable, usually for up to 12 months. It helps to know your numbers first, which is what our affordability tool is for.
What is a statutory demand from HMRC?
A formal demand for a debt, usually giving 21 days to pay before HMRC can petition to wind the company up. It is a serious warning to get advice immediately.