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Unmanageable HMRC Debt Threatens Fashion Retailer

women's clothes store.

Company overview

We were contacted by a women’s fashion retailer to help with some business issues they’d been having. The company was already well established, having first opened its doors back in 2013, and employed a handful of staff.

Business had been going well, and they reported an annual turnover of over £500k the year prior.


The problem

Unfortunately for our client, a projected busy period didn’t provide as much business as they expected it to. This meant that the extra stock that they’d bought in to capitalise on this period lay unsold in their inventory. The purchase of these items paired with the lack of income from their sale hit the company’s cash flow hard.

Once a company’s cash flow is disrupted, it can escalate into a much larger problem very quickly. In this fashion retailer’s case, it meant that they struggled to pay their tax bill to HMRC.

The owner had tackled tax payment issues with HMRC previously and had managed to get a Time to Pay arrangement put in place for their company. This allows a business to make incremental payments over the course of a set period. Such arrangements typically make it easier for a business to handle tax payments, but aren’t always offered up willingly by HMRC. Even when they are offered, the repayment terms may still be difficult for the applicant business to keep to.

This seemed to be the case for our client. The owner had to eventually renegotiate the deal soon afterwards when the business found HMRC’s repayment plan impossible to adhere to.


The challenge

Although they had done well in not only securing a Time to Pay arrangement in the first place, but also renegotiating the terms, it was not enough. When the next VAT quarter came around, the business found that it couldn’t afford to pay what it owed. The director attempted to go back to HMRC to see if they could add this debt to their already renegotiated agreement, but they rejected this request.

Without a means of paying off the HMRC debt, the next steps for HMRC to take would be to add penalty charges to the already insurmountable bill. If bills are still not paid after this, HMRC often petition the courts to have the businesses liquidated.


How we helped

As already mentioned, the owner had done remarkably well in securing and then renegotiating a Time to Pay arrangement with HMRC. Unfortunately though, HMRC’s payment plans often involve high payments over short periods of time that companies struggle to manage. This was still the case after their renegotiation.

We pride ourselves on our excellent relationship with HMRC that allows us to provide the best possible Time to Pay arrangements for our clients. Having worked with countless businesses to arrange payment plans with HMRC that have enabled them to continue trading, we were confident we could help here too.

Our specialist Time to Pay negotiation team managed to renegotiate terms with HMRC that allowed our client to add the missed VAT quarter’s payment as they had hoped for. They were also able to make the payments more affordable by extending the payment period from 18 months to a more manageable 21 months.


The result

The Time to Pay arrangement we were able to put in place for the company allowed it to keep its doors open and continue trading. With less strain on their cash flow, and no more HMRC stresses to contend with, the business has been able to concentrate on moving the company forward.

Our client is currently enjoying great success with its most recent growth strategy. By utilising social media platform, TikTok, sales have grown very well, and the retailer can now look forward to far more positive times ahead.


Struggling with HMRC payments?

Our specialist Time to Pay negotiation team have been able to save countless UK businesses from the brink by arranging affordable solutions for those in trouble.

Every month, scores of companies are needlessly closed after falling behind on their tax payments. Had they come to us at the first sign of trouble, we could have made their tax issue manageable enough to continue trading.

Don’t allow your business to become another insolvency statistic. Call us now on 0800 975 0380, or email [email protected] for a free consultation.

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