HMRC Enforcement Powers

Gem7321Gem7321 Experienced MentorDevonMAAT, AAT Licensed Accountant Posts: 1,438
I have a client who has undergone a VAT inspection and we are now trying to enter into a TTP arrangement but they need longer than 12 months so HMRC being very disagreeable.

I am not very knowledgeable in this area, is there anyone who would be willing to share some advice on HMRC enforcement powers? By phone call or email?

The directors are concerned that HMRC will 'come after them' personally. HMRC have already advised that unless the directors accept a 12 month agreement they will refer to an enforcement agency.

Help!

Comments

  • Bmer82Bmer82 PlymouthFMAAT Posts: 70
    working for a football club that went bust I have had quite a bit of experience in this area.

    HMRC start point is always hardball . you havent noted legal structure above but happy to tell you my personal experience of the process they follow. not a licenced member so will only be as a start point to your research
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    @Mickdundee so far only a verbal offer has been made by my client which HMRC refused (also verbally). I have spoken to HMRC and they have agreed that I can send them a cashflow forecast to help with their considerations in making an offer.

    My client would really like 3 years, but I have never known HMRC agree to anything over 2 years. Any experiences gratefully received!

    @Bmer82 typical H&W ltd. co. were trading from home but now rent a workshop space although the registered office and I believe the trading address for VAT purposes is their home which is making me a little nervous. However any company assets of any value are held at the workshop.
  • Bmer82Bmer82 PlymouthFMAAT Posts: 70
    well in strict terms because it is a limited co HMRC cannot persue the individuals personally bar normal recourse if directors are deemed to have acted inappropriately. the difficulty is that HMRC are able to attend any company premises being trading or registered offices and can do a walking possession order basically listing assets to the value of the debt. this gives a period to pay before the assets are collected by baliffs. in this instance it would be down to your client to be able to prove assets at the registered address are not owned by the company.

    has the inspection resulted in further penalties or have HMRC deemed that your client acted in good faith this will impact on HMRCs stance.

    I have known businesses to shut their doors due to similar situations. are the directors able to leverage commercial finance to settle HMRC and repay over their preferred period? now is the time to investigate this whilst negotiating with HMRC.

    provide HMRC with as much info to bolster the case as possible it is not in their interest to drive your client out of business but unfortunately some of the foot soldiers are a bit blinded by this as they are targetted on collections within 12 months so you may have to request to speak to someone higher up
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    Thanks both for your comments.

    Unfortunately the directors are not in a position to take-on any form of borrowing and it is unlikely the company would be accepted for a commercial loan either. Due to the nature of the business invoice financing would not be an option, is there anything I am missing?
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    But the company does have assets, but they are assets necessary for the running of the business. Can these be protected from seizure as tools of the trade or will they be at risk?
  • Bmer82Bmer82 PlymouthFMAAT Posts: 70
    @Gem7321 unfortunately there is no such protection anything they can get a value for they will list. (they were even after our players boots until they found they were bought by the players). HMRC take a winding up route as last resort as they have to prove other means have failed. you need to build a robust arguement for a TTP offering as much as your client can afford as downpayment. Back it with as much in the way of actual and forecast trading figures explaining why you can only afford x amount a month if needed try to get a meeting with your MP to see if they can assist with pressure on HMRC.

    If the business cannot truely afford what HMRC want they have 3 options either they speak to an IP and look at insolvancy options, sell assets to raise the funds or look to see if they can raise additional equity investment.
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    Thanks both for your comments
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