A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
Can You Write Off Company HMRC Tax Debts?
The short answer is: yes, but only through formal insolvency, and only for the company - not for you personally where personal liability applies.
Company tax debts (VAT, PAYE, Corporation Tax, CIS) are unsecured debts of the company. They are written off with the other unsecured debts when the company is dissolved in a liquidation - but the company ceases to exist, and HMRC will only receive a share of any available assets.
How It Works in Each Procedure
Creditors' Voluntary Liquidation (CVL)
Unpaid tax is written off with the other unsecured debts when the company is dissolved. HMRC may receive a dividend from the liquidation if there are assets, but any balance is extinguished.
Company Voluntary Arrangement (CVA)
A CVA can write off a portion of the tax debt while the company continues trading. Creditors - including HMRC - agree to accept a reduced settlement over time. This suits a viable business burdened by historic tax arrears.
Administration
HMRC enforcement is paused by the moratorium, and tax debts are dealt with through the administration process - typically via a CVA, a sale, or subsequent liquidation.
Compulsory Liquidation
Tax debts are written off on dissolution, but a compulsory liquidation is usually a worse outcome for directors than a voluntary one.
What Is Not Written Off
- Personal Liability Notices for PAYE - these follow you personally and are not extinguished by the company's liquidation
- Personal guarantees of tax debts (rare but possible)
- Debts arising from fraud - can lead to personal liability
Beware "Write Off Your Tax Debt" Schemes
Some firms promise to "write off" tax debts easily. Genuine write-off requires formal insolvency - there is no shortcut. Be wary of anyone offering a quick fix without assessing your situation properly.
Speak to a Licensed IP
If your company owes tax it cannot pay, our Manchester-based practitioners will explain honestly whether a CVA, administration, or liquidation is the right route, and what it means for you and HMRC.