These are a few of our frequently asked questions regarding Tax Arrears and Crown Debt Reports:
Q. Who is the Crown?
A. The Crown is the generic term used to describe HM Revenue and Customs; the government agency responsible for the collection of direct and indirect taxes: it incorporates the Inland Revenue and Customs and Excise.
Q. Are PAYE/NIC and VAT arrears the only taxes that can be included?
A. The repayment can include all your arrears with the Crown, which include income tax deductions, national insurance deductions and payments, VAT, corporation tax and self assessment tax. However, if you are in doubt please call our consultants to discuss your arrears in more detail.
Q. How many businesses have you helped?
A. To date we have assisted more than 50 companies to secure agreements with the Crown.
Q. Are there any sectors which are excluded from assistance?
A. There are no sectors which are excluded from participating in the scheme. We have dealt with companies from a variety of sectors and geographical locations. Each case is taken on its merits, so please contact our consultant to discuss your issues further.
Q. What companies are assisted?
A. The scheme has been developed to assist companies who have short-term financial issues from which arrears to the Crown have arisen. However, companies who have experienced lengthy arrears should also contact us as they are not excluded from this process.
Q. What is the timescale in obtaining an agreement?
A. This is very much dependent on the complexity of each case. In general, on engagement, a moratorium would be established within which we would prepare a report proposing a repayment profile. The Crown will then take 2-3 weeks to come to their decision. Typically, an agreement can be reached up to 5 weeks after our initial visit.
Q. Why can't I agree a proposal with the Crown myself?
A. Our consultants have been involved with Business Recovery Schemes supported by the Regional Development Agencies in England and the Crown. In association with the Crown, a reporting format and timetable have evolved and now accepted by all regional and national units. With this experience, our consultants are aware of what is acceptable to the Crown and how to best formulate a repayment profile that will suit your cashflow and the Crown. Notwithstanding this, direct proposals from the directors or nominated financial advisers have a lower chance of success since their proposals have a perceived lack of objectivity and clarity. Our involvement brings independence leading to an objective review of repayment.
Q. What is involved in achieving an agreement?
A. After the establishment of a moratorium, our consultants will perform a detailed diagnostic of your business. This will involve identifying the reasons for the financial position, which has led to the arrears, determining your future strategies and prospects and reviewing the financial schedules. Assistance can be provided in the preparation of the financial schedules, especially the cashflow that is the critical document used to determine what level of repayments the company can afford. A tailored report is prepared and submitted to the Crown for review. The consultant will undertake all negotiations with the Crown on your behalf.
Q. What periods of repayment have you agreed?
A. Since all cases and companies are different, so are the levels of repayment. However, typically periods range from 6 months to 24 months have been negotiated.
Q. What is contained in the 'report' submitted to the Crown?
A. The report provides the Crown with a detailed insight into the Company, providing them with three key aspects: (i) who you are; (ii) what went wrong; (iii) what is different in the future. Each of the sections are supported by additional information such as financial trading both historic and future as well as strategy documents if it is felt appropriate.
Q. Whose side are you on?
A. Throughout the whole process, the consultant will be dealing with the Crown on your behalf. It is the primary intention to re-schedule your arrears over a timescale that fits the cashflow of your business within the criteria established by the Crown.
Q. Is this process a Company Voluntary Arrangement (CVA) or some other form of Insolvency?
A. The process of negotiating with the Crown is a process solely between your company and the Crown. It is strictly confidential. Therefore it is not a formal insolvency procedure. However, once agreed, the company may find it beneficial to inform other relevant parties of the arrangement in order to provide confidence in the businesses ability to continue to trade (ie company's banker(s)).
Q. What if you determine that my company is not viable?
A. Unfortunately not all companies overcome their financial difficulties. We will not propose clients who we feel will not adhere to the terms proposed. Therefore, we will work with you to determine the best strategy for your business and support you through that process.
Q. What if I have already received warning letters from the Crown?
A. The worse strategy is to ignore the letters from the Crown. By ignoring them, you may become involved in recovery action, which may ultimately lead to the business being wound up. If you have received such letters, please contact us immediately.
Q. I have defaulted in the past. Does this exclude me from the process?
A. Previous defaults of payment does not automatically exclude the company from reaching agreement with the Crown. However, regular failures could be a symptom of a more fundamental issue than just a short-term blip. During the diagnostic, these issues will be discussed.
Q. I am in arrears but I have not had any notification from the Crown - do I need to be in the process?
A. The fact that the Crown has not notified you of the arrears does not indicate that you are safe. If you cannot repay the arrears in full, then it would be wise to contact us immediately and allow us to undertake negotiations to repay these. The next warning that you may receive is a visit from the Bailiffs or worse still, a winding up petition.
Q. What happens after the agreement is reached?
A. Once the agreement is reached, then you can continue running your business without fear of being wound up by the Crown. The agreement is not to be seen as the solution to your problems but providing the company breathing space to address the issues that caused the initial financial problems. In many cases, we have been instructed by the client to assist in addressing some of the underlying issues.
Q. What are my responsibilities to the Crown after agreement?
A. The obligations of the company, once an agreement is reached, is to maintain current payments as they fall due and adhere to the agreed repayment profile. This is important. If you feel that you cannot maintain either current payments or the repayment, it is wise to be proactive and contact us immediately. A revised agreement can be possible but it is important to understand the reasons why a payment could not be made as this may have serious implications to the viability of the business.
Q. What if I have a question which has not been answered above?
A. If you have any further questions about the process or Sterling Business Strategies, then please contact us and we will be happy to discuss them through with you. Additionally, you can complete the simple online enquiry form and one of our consultants will be in contact with you.
Use our Online Enquiry Form or Contact Us on 0800 0735353 to arrange an initial visit with one of our consultants.
