Case Study: Wine Importers Find Themselves in the Red

Being presented with insurmountable tax bills is never pleasant, but if there ever was a worst time, it might be over Christmas.

Unfortunately, that’s exactly what happened to our client, who found their festive build-up ruined with the stress of wondering what they could do to keep their business afloat in the face of large VAT and Corporation Tax bills.

Company overview

Our client had built a strong and profitable business as an importer and exporter of wine but originally began as a wine bar and eatery. As such, it had done well to navigate through the Covid-19 pandemic. Their idea to broaden their service offering by delivering wine to local customers soon blossomed into a full-blown retail business.

The problem

An upcoming Corporation Tax bill in January, and VAT bill the following month were troubling the directors of the business, whose cash flow was already being stretched tight by repayments of a large business loan.

The challenge

A Time to Pay arrangement seemed like the best route to take. HMRC Negotiator for Forbes Burton, Nicholas Troth, explains that “a Time to Pay arrangement (or TTP) is a scheme that allows those that can’t pay their tax bills in one go to use a payment instalment plan.

It’s not something that HMRC particularly shout about, and they can often be reluctant to offer it as a solution, but thanks to our excellent working relationship with HMRC, we’ve been able to secure some fantastic deals for our clients over the years”.

There was just one problem with this. Our client already had an existing TTP arrangement of £5,500 per month in place. With this, the business loan repayments, and the two large tax bills on the horizon, our client feared that they’d default on the TTP and quickly incur the wrath of HMRC.

How we helped

The tax bill was simply unpayable in its current guise, so something had to give. Unless it was broken up into manageable payments somehow the debt would almost certainly end the company.

The client had hoped that we might be able to consolidate all the HMRC debts into a new TTP arrangement. While technically possible, such deals are notoriously difficult to negotiate with HMRC.

Thankfully, experienced negotiator, Nicholas Troth was able to arrange just that. He was able to point to the company’s profitability and the fact that their large business loan repayments were set to end in a handful of months to convince HMRC that the company was worthy of another chance.

The result

The resulting arrangement was a brilliant deal. While terms had to be extended to accommodate the new debt, we managed to actually reduce the monthly amount they were already paying by £230. The arrangement we negotiated saw the company’s original TTP agreement of £5,500pm, plus the new Corporation Tax and VAT bills consolidated into one monthly payment of £5,270 over 20 months.

This was less than they were already paying, so allowed them to comfortably carry on trading while building up a larger cash reserve. Once the business loan terms end, the company will be in a great place to build from and possible expand in the future.

Don’t allow HMRC debt to escalate

With so much at stake, directors can’t afford to simply stand by when receiving an insurmountable tax bill. Action needs to be taken as soon as possible to prevent HMRC from closing down businesses and hiring debt collection agencies.

All it takes is one call to a professional business recovery specialist, such as ourselves to get the wheels in motion to secure a realistic payment plan.

Speak to a specialist adviser now on 0800 060 8446, or email advice@forbesburton.com for a free consultation with no obligation to see how we can help.