Advice for businesses facing the repayment of unpaid employee taxes

12th July 2021

HMRC has written to 1,200 companies asking them to repay unpaid employment taxes (according to the Financial Times). Only companies where income tax and NI payments are more than nine months in arrears were written to. Still, the representatives of the leisure, hospitality and retail sectors that have been suffering as a result of the pandemic have raised concerns about what they refer to as ‘new costs’.

The problem is that these are not ‘new costs’.

It was always a condition of the CJRS (Coronavirus Job Retention Scheme) that those businesses that took advantage of the scheme were responsible for paying employees’ income tax and NI out of the grant received by them.

Clear guidance on the point was set out on the Government’s website, though any business owner or director facing the plethora of challenges thrown up by the pandemic can perhaps be forgiven for not being able to devote the time that drilling into the detail of the range of financial support that was made available.

It won’t surprise you that the HMRC is now clamping down on the non-payment  of employee taxes.

Where does that leave business owners/directors that have received the demands or expect to?

There is excellent guidance in the free R3 guide ‘Get Back to Business’ https://www.backtobusinessuk.com/ which should allay some fears, but the first step has to be to take professional advice as quickly as possible.

Accountants, insolvency practitioners, solicitors and business advisors can all help before the inevitable conversation with HMRC.At the end of the day, the HMRC wants to recover the taxes and is likely to be more receptive to an offer to pay over a period of time which is supported by a robust but realistic cashflow.

Doing nothing is not an option.

Whilst liability for wrongful trading was suspended for lengthy periods by the new legislation introduced by the Government, the duties of directors set out in the Companies Act were not, neither has the risk of disqualification (which in itself carries the risk of compensation orders being made against directors).

There is a lot for any business owner or director to understand and keep on top of fully. Don’t leave it until it is too late, we’re here to help and guide you through the options. Get in touch.

Contact the team below to find out how you can mitigate the risks and find a solution to any concerns you may have.

Richard Drinkwater
Zoe Oates
Richard Fergusson

 

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