Welcome to our bulletin
As the country continues to feel the impact of the coronavirus, no doubt you’re being inundated with client queries in relation to the effects on their respective businesses as well as Government measures such as the CBILS and the furlough process. Whilst our team is now working remotely, both Andy and Tom are contactable on their usual mobiles/emails should you wish to discuss any client queries to consider options, please don’t hesitate to get in touch for a call or video chat.
Given recent announcements and developments through Government and in the media, we thought it might be helpful to put together a series of brief bulletins, with some practical points which we hope you will find beneficial when considering options for your clients.
Considerations when deferring HMRC debts
What we want to do here is look slightly into the future – so that the following can be considered in any advice and client decision making now.
The Government has given instructions to HMRC to cease all collection and recovery action for the next few months. However, the Chancellor has recently confirmed that austerity measures will be put in place once the Coronavirus passes and it is our view that this will no doubt be part of a Government strategy to give HMRC its teeth back as early as possible. What they give in one hand they will take with the other.
The welcome assistance given to businesses in deferring HMRC liabilities is not a get out of jail free card, it is deferring the payment until a future time. It is our thought that there will be a short window once the crisis is under control, when HMRC will continue to take a more accepting approach to businesses looking to come to an arrangement for dealing with its Crown debts, before it gets its teeth back. During this window we expect HMRC would be more lenient in agreeing time to pay arrangements and also Company Voluntary Arrangements (CVAs). There is therefore a careful balancing act to be done in making sure that clients look to properly deal with their debts at the earliest possible opportunity once their business is back to something resembling normality, before HMRC gets back to firing on all cylinders.
For now though, cash is certainly king and any assistance on Crown debts will likely be taken advantage of by directors in an attempt to protect the business. We would encourage directors to ensure board minutes backing up their decisions are produced as well as financial projections (however basic) which demonstrates when and how the deferred Crown debt will be repaid by the company. Documenting such decision making now is helpful for directors should an insolvency solution such as Administration or Liquidation be the only route available in a few months’ time for directors looking to save the underlying business. It would also be advisable for directors to ensure they keep contemporaneous notes evidencing their decisions if/when they apply for funding as well as furloughing/dismissing employees.
What has HMRC said recently regarding enforcement
HMRC have publicly confirmed that they have paused the majority of all insolvency activity for now. That means HMRC will not petition for bankruptcy or winding up orders unless it is deemed essential, i.e. fraud or criminal activity. Through our own enquiries and discussions with other professionals in our network, we understand that: -
• HMRC field agents/enforcement team have been told not to undertake any visits for the next 12 weeks
• HMRC are not expecting any payments until at least the end of June (including pre-arranged TTP payments)
• HMRC will not petition for bankruptcy or winding up for the next 12 weeks
• Petitions which are due to be heard in the next 12 weeks are being adjourned
Speak to us
Yes these are “unprecedented” times, business owners up and down the country are feeling the detrimental effects day after day on the business they have started, established and grown. However, we remind everyone that advising distressed businesses is what we do year in year out – between Andy and Tom we have over 40 years’ combined experience in business rescue, restructuring and insolvency as well as business finance. We can confidently say that the earlier directors take professional advice, the more options there are available to preserve the business.
We are here to speak to whenever you like. We can set up a video conference between us, you and your client to deal with pressing matters and to bounce around ideas. As always, we don’t charge for initial advice and all our discussions are in the strictest of confidence.