HMRC Chasing Your Company?
Understand Their Next Move.
Letters, phone calls, field force visits—when HMRC wants its money, they don’t give up. But their escalation process is predictable, and at every stage there are ways to buy time, negotiate, or fight back. Femi knows their playbook from the inside.
HMRC Is the UK’s Most Aggressive Creditor
HMRC is responsible for approximately 60% of all winding up petitions in the UK. Unlike commercial creditors who might negotiate, write off small debts, or simply walk away, HMRC has vast resources, statutory powers, and a mandate to collect every penny owed to the public purse.
When HMRC starts chasing your company, ignoring them is the worst thing you can do. They won’t forget. They won’t give up. And the longer you leave it, the fewer options you have.
But here’s what many directors don’t realise: HMRC would generally rather get paid than wind up your company. A liquidated company often pays creditors pennies in the pound. If you engage properly, demonstrate you’re serious about paying, and present a credible plan, they will often negotiate.
HMRC’s Escalation Process
HMRC follows a predictable path. Understanding where you are helps you take the right action at the right time.
Reminder Letters & Calls
Shortly after a payment is missed, HMRC sends reminder letters. These start friendly but become increasingly formal. They may also call to discuss payment. At this stage, you have maximum flexibility.
Final Warning / Debt Collection
If you haven’t responded or arranged payment, HMRC sends a “Final Opportunity” letter warning of enforcement action. They may also pass your debt to one of their eight contracted debt collection agencies.
Field Force Visit / Distraint
HMRC may send a Field Force Officer to your business premises. They can demand immediate payment or set up a Time to Pay on the spot. They can also issue a distraint notice, allowing them to seize and sell company assets to recover the debt.
Statutory Demand
HMRC serves a statutory demand—a formal written notice demanding payment within 21 days. This is the final step before a winding up petition. If you don’t pay, negotiate, or successfully challenge the demand, a petition will follow.
Winding Up Petition
HMRC files a petition with the court to have your company compulsorily liquidated. Once advertised in the London Gazette (7 days after service), your bank accounts are frozen. If not resolved, a winding up order follows and your company ceases to exist.
Types of HMRC Debt
Different tax debts carry different risks. Understanding yours helps prioritise your response.
VAT
Money you’ve collected on behalf of HMRC. They view this as “their money” that you’re holding, making them especially aggressive about recovery.
High Priority to HMRCPAYE & National Insurance
Deductions from employee wages that should be passed to HMRC. Like VAT, this is money you’ve already withheld—HMRC pursues it vigorously.
High Priority to HMRCCorporation Tax
Tax on company profits, due 9 months after year-end. Often causes cash flow problems when profits were reinvested before the bill arrived.
Medium PriorityCIS (Construction Industry)
Deductions from subcontractor payments. Like PAYE, this is money you’ve collected that should be passed on—HMRC expects prompt payment.
High Priority to HMRCYour Options When HMRC Is Chasing You
Don’t Ignore HMRC
The worst thing you can do is bury your head in the sand. HMRC interprets silence as refusal to engage, and they’ll escalate faster. Even if you can’t pay right now, communication buys time and demonstrates good faith.
Insider Knowledge: How HMRC Really Works
Femi spent years as an HMRC Inspector before becoming a solicitor. He knows things that most advisers don’t:
HMRC has internal targets. Debt officers are measured on collection rates and case throughput. A well-presented Time to Pay proposal that clears their desk and shows likely recovery is often preferable to them than an uncertain enforcement battle.
The Solicitor’s Office is the decision point. Once your case is passed to HMRC’s Solicitor’s Office for legal action, the tone changes. Before that point, there’s much more flexibility. After it, you’re dealing with a legal process that has its own momentum.
HMRC respects professional representation. When a qualified adviser contacts them with a credible proposal, it signals you’re taking matters seriously. This often leads to better outcomes than directors trying to negotiate directly.
Why Femi Is Uniquely Qualified to Help With HMRC
When you’re dealing with HMRC, having someone who’s been on the inside makes all the difference. Femi isn’t just a solicitor—he’s a former HMRC Inspector who understands exactly how they operate.
- Former HMRC Inspector — knows their processes, priorities, and pressure points from the inside
- Tax adviser and solicitor — dual qualification means both legal and technical tax expertise
- 30+ years negotiating with HMRC — extensive track record of successful outcomes
- Direct communication with HMRC — Femi handles all contact so you don’t have to
- Practical, commercial approach — focused on realistic solutions, not just legal technicalities
Frequently Asked Questions
It varies, but typically HMRC will move from letters to enforcement action within 2-3 months if they receive no response. If you’re communicating with them—even if you can’t pay immediately—they’ll usually hold off on escalation. The worst thing is silence, which they interpret as refusal to engage.
Yes. HMRC can and does petition to wind up companies for unpaid taxes. They’re responsible for around 60% of all winding up petitions in the UK. However, this is a last resort—they’d generally rather recover the debt through a Time to Pay arrangement than see your company liquidated for a fraction of what’s owed.
A Time to Pay (TTP) arrangement is an agreement with HMRC to pay your tax debt in instalments over a period of time—typically up to 12 months, though longer periods are sometimes possible. While in a TTP, HMRC won’t take enforcement action provided you keep up with the payments and pay all current taxes on time.
Yes, HMRC has the power to recover tax debts directly from bank accounts through their “Direct Recovery of Debts” scheme. However, this is only used for debts over £1,000 where other collection attempts have failed, and they must leave at least £5,000 in your account. They also have to give you advance notice and an opportunity to pay or make alternative arrangements.
Generally, limited company directors aren’t personally liable for company debts. However, there are exceptions. HMRC can pursue directors personally in cases of fraud, if you’ve signed personal guarantees, or in certain circumstances involving unpaid PAYE/NIC. There’s also the risk of wrongful trading claims if you continue trading while insolvent. It’s important to get advice on your personal exposure early.
For small debts where you can afford to pay in instalments, you can often arrange a Time to Pay directly by calling HMRC. For larger debts, disputed amounts, or situations where HMRC has already started enforcement action, professional representation significantly improves your chances of a good outcome. HMRC also tends to take proposals more seriously when they come from qualified advisers.
Don’t Let HMRC Control the Conversation
The earlier you get expert help, the more options you have. Book a free 30-minute consultation with Femi to understand your position and plan your next move.
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