The easiest way to explain how we can help is to provide some Case Studies. We can act in relation to Income Tax, Capital Gains Tax, Corporation Tax, VAT or PAYE debt issues:
Case Study 1: VAT debt caused multiple issues and threatened viability of company
Our client's bank abruptly withdrew their overdraft meaning that they could not pay the quarterly VAT when due. As is all too common with acts of this nature, that put the company in breach of its' Invoice Finance facility and the Factoring company were threatening to call in that facility and then demand full repayment of the facility both from the company and then under a Personal Guarantee from the Director. The amount outstanding to the Finance Company was covered 300% by debts owing to the Limited company which had all been assigned to the invoice finance company. Announcing a review of the facility, the Factoring Company 'paused' drawdowns meaning that the company could not access any of its' invoice balances.
The Accountant recommended an Insolvency Practitioner to give advice. As is fairly standard, the Liquidator advised that placing the company into liquidation was the only option. Desperate for an alternative, they approached us for a second opinion.
We reviewed the position in full within 24 hours. We spotted a claim that the company could make with HMRC to reclaim tax paid elsewhere and then use those funds to pay the VAT due.
Using our expertise, we were able to mediate between Director & Finance Company and ally their concerns. They agreed to 'pause' the pause on drawdowns for a short period to enable us to complete our work. We then supported the Director with financial information to enable him to open a new bank account and get some modest facilities. At the same time, we filed the claim with HMRC but instead of offsetting the claim against the VAT, we worked with the finance company and HMRC to get a payment arrangement for the VAT and release the claim amount to the company in full.
That helped with some much needed working capital and provided a route to the company being able to wean itself off the overdraft that had caused the issues in the first place.
Finally, we negotiated with the, now, old bank that they would allow the company to pay the overdraft off over 12 months. The company paid the three instalments towards the overdraft and then paid the next quarter's VAT in full. This gave the new bank confidence to provide a 5-year loan to repay the old bank in full.
We stayed appointed for 12 months (in total) to ensure that all of the 'damage' caused by the original bank's abrupt overdraft withdrawal was reversed and ensured all HMRC conditions, on the VAT arrangement, were met.
Case Study 2: Income Tax threatened Sole Trader's ability to continue
Our client approached us following a recommendation as she was receiving demands from HMRC to pay £28,000 else face a bankruptcy petition. She was asset rich but cash poor and the debt had built up over a period where she had been unable to work owing to a mental health issue.
As a first step, we got HMRC to address all communication to us and leave the taxpayer completely alone to stop unnecessary pressure. We also got HMRC to pause all enforcement action for a short period to allow us to review the position.
We then advised the client to incorporate her business and transfer trading immediately to the limited company. This protected the business from any enforcement action but also reduced future taxation. It also enabled us to defer some tax that was due imminently which would have exacerbated the existing issues that HMRC were pursuing.
Next, we put forward a fully evidenced payment proposal splitting the £28,000 over a 5-year payment plan to make the payment affordable and allow our client to recover, not only financially, but also from the issues that had bought her to that point.
We were also able to structure the incorporation to reduce our clients' tax rate, on £25,000 of income, to 7.6% and added the £1,900 payment to the 5-year payment plan.
Not only did this solve the original debt problem that had 'necessitated' our appointment but this also gave our client some much needed relief whilst she recovered from her mental health issues.