Business failed due to C19 how to pay HMRC?

[noeyeidea]

Covid well and truly killed by business. As the director of a single employee limited company, I also received very little in terms of support. I claimed what little furlough I could based on my PAYE contributions but eventually had to call it a day and get a headcount role elsewhere as the payments didn't even cover my mortgage and my savings have now gone. Apart from the disappointment of closing a business I had built over 6 years, I am also so angry. If I had been set up as anything other than a limited company, I would be in a much better situation right now.
I owe a far amount to HMRC. I have spoken to them and the best they can do is offer me a repayment plan, but with no money coming in the business, I will have to find this from my current salary. Does anyone know of any support that I can access to help clear this debt? It doesn't look like I will be returning to the business anytime soon as my industry is yet to recover. Thanks in advance

What is the debt for? Did you not take any loans to help you see it through? Or look at local grants if you were forced to close (for example my local authority has offered grants throughout to people who didn't qualify for seiss but their business suffered last year.

I really feel for you.

I was in the exact same situation, fortunately I managed to float my business through my savings but I don’t think people who aren’t in your particular situation are going to understand.

I think your only bet is going to be payment plan. Hopefully they’ll be able to give you a long and lenient one.

I managed to get one grant at the beginning but I don’t think they’d give it to businesses that have closed.

Thank you both for the replies. @MoonbeamSprinkles I am glad to hear you have managed to keep going. My savings have covered my living expenses for the last 18 months but not a lot else.

@delilahbucket I didn't take out the loans as I was worried about how I would be able to pay them back with no work coming in.

I received one very small grant from my local council but not enough to replace what I should have received had I been self employed. Most grants were tied to business rates and I didn't qualify. I think so many are in the same boat but I guess I was hoping someone brighter than me had some magical fix.

If you don't think your company will get back on its feet I'd think of a credities voluntary liquidation. You need to speak to a specialist.

Creditors

The company is still running but the plan is to enter dormant accounts going forward, just in case I can ever go back to it.
I saw a lot on the news about people setting up fake Ltd companies to claim the £50k loans on offer and wondered how they managed it tbh!
I looked into liquidation briefly but that would still costs around £2k and effect my ability to run another business in the future as well as my credit rating.

A voluntary liquidation won't stop you setting up a company in the future. Unfortunately I know someone who has done it several times, once owing me ££. You'll only be banned if the liquidator says your conduct was unfit.

You can't trade if you are insolvent - that might get you banned and I'm not sure you can make the company dormant if it actively owes money to a creditor I.e. HMRC.
Have you got an accountant?

thanks for the info @Theworldisfullofgs. I do have an accountant but she isn't being particularly helpful. She is very straight laced - as she should be of course - but I had to find out about any C19 help myself as nothing was forthcoming.

I'd consider getting some different advice. A different accountant. You need help without feeling judged or letting the fear get you.
Can we ask what field your business operates in? No chance of earning enough to cover the debt?

What do you owe HMRC for? Corporation Tax for a prior year? If you get your latest year end accounts done, won’t they show a loss? You could carry back the loss against your previous profits, reducing your corporation tax liability. I think! Speak to your accountant.

@Theworldisfullofgs I think that is a good idea. The business is very niche events for a specific B2B sector. There is very little chance of anything happening soon and now I am in a headcount role I am worried about loosing this income.
@Finzi That is a very good idea, thank you, I will ask her
Thanks everyone so much for your help so far, it is hugely appreciated!

Why do you owe HMRC anything if you've made a loss? My business has closed due to Covid I just can't keep it going anymore but I've done carework to keep afloat and with the business losses I don't owe HMRC anything really. If you've made losses running the business they will offset any tax owed??

@Whinginadeville last year's corporation tax

You should be able to claim tax relief then. I think you need a better accountant.

www.gov.uk/guidance/corporation-tax-calculating-and-claiming-a-loss

Look at the bottom of the page - carry a trading loss back.

If you're running as a Ltd company you should be holding money and you can definitely still offset losses. You need a new accountant because this one seems to have set you up with an a tax avoidance scheme (yes a legal one but still one designed to help you dodge tax) without explaining the consequences.

Assuming you've played it by the book, i.e. dividends only out of post tax profits, no loans from company to yourself, etc., then you can just forget the company and let HMRC appoint liquidators to wind it up.

However, that doesn't work if you've paid yourself "illegal" dividends, i.e. not of of retained profits, or your company has advanced monies that aren't wages, dividends etc (i.e. they become loans by default). In that case, a liquidator could come after you, personally, for the money you owe the company.

(All assuming you've not signed any personal guarantees etc to your bank, creditors, etc).

@Whinginadeville

If you're running as a Ltd company you should be holding money and you can definitely still offset losses. You need a new accountant because this one seems to have set you up with an a tax avoidance scheme (yes a legal one but still one designed to help you dodge tax) without explaining the consequences.

That depends on whether it was the accountant who suggested a limited company or whether the OP formed it themselves before appointing the accountant (lots of people do that!).