HMRC Debt in 2023

Writing this in 2023, gone are the days of HMRC’s understanding of, not being able to pay debts, especially now that online accounts are in full flow (MTD and all that).

Before and during Covid, you as the Director could have used the excuse that you were not aware of the full liability owed to HMRC for VAT, corp tax, PAYE etc etc as your books were not fully up to date or your books were slightly mismanaged, well unfortunately, but understandably HMRC are no longer taking this as an excuse!

Effectively, if you rinse the company dry of funds to enhance your lifestyle, HMRC can hit you with a 6% interest rate, penalties and come after personal assets if deemed appropriate.

Online Bookkeeping and Accounts.

Our current system are fully MTD ready and is fed by daily bank transactions, real time data and up to the minute tax liabilities in all the areas HMRC will target. There is no excuse that you didn’t know the true tax position from one day to the next. It’s vitally important that you keep on top of these liabilities, especially now HMRC have a huge covid debt to cover.

Directors and their responsibilities.

The Director(s) drive the vehicle of the limited company and it’s their duty to ensure enough funds are in the bank to continue to trade and to cover any liabilities. Many Directors see the funds in the bank and want to get their hands on it. Any funds taken from the business must be accounted for, therefore ask your Accountant before you take it.

If you are currently sitting with an overdrawn Directors loan account and a debt owed to HMRC, you should expect a letter any time soon asking for the debt to be repaid asap.

Our recommendation.

Please do not try to hide from this debt, pick up the phone (If you can’t afford to pay your tax bill, you need to contact HMRC as soon as possible by calling the Business Payment Support Service on 0300 200 3825.) and take ownership of the debt and come up with a payment plan. HMRC will be far kinder if you are forthcoming with the information.

Please stop with your current spending habits, clearly you are overspending and the company cannot support your outgoings. Do not increase HMRC debts further.

Keep a savings account and put at least 15% of your turnover aside for future tax bills. By doing this you know you cannot touch those funds on a day to day basis.


HMRC will definitely be more aggressive in the future to get what they are owed and will not accept mismanagement as an excuse. If you have any queries or questions on what to do next please call us on 0207 100 6011 or email us at [email protected] and we can talk through a sensible plan of action. Covid was tough on everyone including the Government debt but you do have options if you address the issues now.


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