HMRC Insolvency Powers from April 2020

From 6th April 2020 new measures regarding insolvency will be introduced by the 2019-20 Finance Bill meaning HMRC will have increased powers.

It is proposed that Finance Bill 2019-20 will contain measures to ensure that from 6 April 2020 where a company becomes insolvent with unpaid tax liabilities which it holds in trust to pay to HMRC, these liabilities will take priority over other unsecured or floating charge creditors.  

Taxes that a company holds in trust for HMRC include VAT, PAYE Income Tax, Employee’s National Insurance Contributions and Construction Industry Scheme deductions.  Other company tax liabilities such as Corporation Tax and Employer’s National Insurance Contributions will not be affected by the measure.  HMRC will remain below preferential creditors.

Diane Dunion, Partner from Begbies Traynor Stoke has helped to expand on what exactly this means for businesses:

“The draft legislation proposes to amend The Insolvency Act 1986, giving HMRC priority in the recovery of VAT and certain other debts owed to HMRC in insolvency proceedings; by creating a new category of creditor for the purpose of the distribution of assets. 

When a business enters formal insolvency proceedings, the order in which assets are distributed is prescribed by law.  Currently, HMRC ranks as an unsecured creditor.  The introduction of the legislation will allow HMRC to rank as a “secondary preferential” creditor, which places them in a better position on the creditor hierarchy.

However, HMRC will remain an unsecured creditor, for taxes levied on businesses such as Corporation Tax and Employer NIC.

The Explanatory Note to the Legislation notes that “the Government does not believe it is fair that taxes paid by employees and customers should be diverted to other creditors, when these are only held temporarily by businesses whose role is to transfer these payments to the Government. The Government view is that this is a fair approach that balances the interests of creditors and the Exchequer, which relies on these taxes to fund public services.”  

Monies collected in respect of those taxes paid by employees and customers, are essentially held on trust for HMRC.  On that basis and in the event of formal insolvency proceedings, these funds will be paid over to HMRC – to “benefit the wider population by being utilised for their original purpose” (i.e. to fund public services).”

The new finance bill will also allow HMRC from 6 April 2020 to make directors and other persons involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency. It is designed to prevent individuals benefitting from avoidance or evasion through the insolvency of their business when unable to pay its debts to HMRC.

The conditions for a joint liability notice are:

  • Insolvency is underway for the company or there is serious threat of insolvency
  • A company has entered into tax avoidance arrangements, or engaged in tax evasive conduct.
  • The person either was responsible for the company/LLP (perhaps as a director or shadow director), enabled the avoidance or evasion or benefited from it
  • A tax liability is expected to arise from the avoidance or evasion and there is a serious possibility that some or all of that tax will not be paid

The new rules will also allow HMRC to issue a joint liability notice to individuals whose companies have been involved with repeated insolvency or non-payment of tax with limited liability

There is a common misconception that directors/members will not be personally liable for anything, because their business has limited liability (either Limited Company or Limited Liability Partnership).  This is not always the case and more people may find themselves held accountable for their actions as a result of the changes.

HMRC’s Let Property Campaign

The Let Property Campaign is an opportunity open to all residential property landlords with undisclosed taxes to get up to date with their tax affairs in a simple way and take advantage of the best possible terms. Unlike previous campaigns, there is no disclosure ‘window’ requiring you to disclose what you owe by a specific date.

HMRC is targeting compliance activity across all landlord types and will identify and write to landlords who they consider may not have declared all their rental income. Those involved will not be able to use the let property campaign.

In order to use the let property campaign you will need to notify HMRC of your intention to make a disclosure and then you will have 90 days to work out and pay what you owe. Penalties if applicable should be less than if HMRC make the discovery themselves.

HMRC may look at things such as the land registry, landlords using the tenancy deposit regime and even issue notices under Paragraph 1, Schedule 23 to the Finance Act 2011 to letting agents in order to obtain details of residential landlords and transactions. Data obtained will then be cross checked against self assessment records. Here at Premier Tax Solutions we have seen this occurring first hand so it is a very real risk.

If you are a residential landlord who would like some confidential advice on the Let Property Campaign please call us on 01782 479699.

For more information on the Let Property Campaign see the following guide:

I have a limited company, what accountancy services would I need?

We offer the following services for limited companies:

  • Statutory accounts preparation
  • Company secretarial services
  • Corporation tax return preparation
  • Payroll
  • PIID
  • CIS contractor returns
  • VAT return preparation
  • Help with HMRC enquiries
  • Tax investigations insurance
  • Research & development claims
  • Capital allowances claims on commercial building
  • Tax efficiency reviews
  • Business restructuring
  • IR35 contractor reviews

For more information, please click here to contact us.

Did you know that we’re Gold Partners of Xero?

The Sky is your limit……with our Cloud nine accounting partner Xero.We are now Gold Partners of Xero, please follow the link to find out more, and to get special package pricing & services: Xero Online Accounting Software

What sort of accountants services do I need if I’m a Sole Trader?

We offer the following services for sole traders:

  • Accounts preparation
  • Self assessment tax return preparation
  • Payroll for employees
  • VAT returns preparation
  • CIS contractor returns
  • CIS subcontractor statements
  • Help with HMRC enquiries
  • Tax investigations insurance
  • PIID preparation for employees
  • Tax efficiency reviews
  • Child benefit higher income cha

Accountants in Stoke-on-Trent

We are tax specialists with experience in practice and industry and are registered with The Chartered Institute of Taxation as a firm of Chartered Tax Advisers.

We are a young team of tax specialists and accountants in Stoke-on-Trent who are passionate about what we do and are proactive in our approach. We will work closely with you to understand your business, your needs and understand what you want to get out of your business.

We constantly look for ways to save you tax and advise you throughout the year of ways to achieve this. Whether that is choosing the best accounting policy for you or choosing the best time to buy your capital assets. We will look to see if the business is structured in the best possible way to reduce your tax bill, to reduce your risk, to protect your assets and to extract money from the business.

Premier Tax Solutions join call to delay Construction VAT change

More than 150,000 construction companies are facing a 20% drop in cash flow when planned VAT changes come into force in October.

Premier Tax Solutions are joining other accountancy practices in calling on the Government to delay the changes for at least six months. The planned “domestic reverse charge” changes mean companies in the construction supply chain will no longer receive their 20% VAT payment when they submit bills. The VAT cash will instead be paid direct to HMRC by the customer receiving the service who will reclaim it in the normal way.

Several pressure groups, including the National Federation of Builders are warning the Chancellor of the Exchequer that this will damage an industry already struggling due to a fragile pre-Brexit economy.

“We work with several firms in the construction industry and it is clear this could hit cash flow at a time when some companies may be just about managing,” said Vanessa Fuller, Director of Premier Tax Solutions.

“We have just seen the demise of Pochin and the problems that has caused for sub-contractors and to work on the development of the Hilton Garden Inn, close to our two North Staffordshire offices.”

Premier Tax Solutions welcomed a statement from its industry professional body, the Chartered Institute of Taxation (CIOT), calling on HMRC to delay the change by six months.

“We now want to see a delay and a major awareness raising campaign to prepare the construction industry for the changes,” adds Vanessa.

“Without this deferment, the industry is predicting significant confusion among businesses, leading to disputes between suppliers and customers as to whether or not VAT should be charged.

“This will have a knock-on effect for the HMRC whose staff could be inundated with calls at the same time as they are currently dealing with the fall-out from Making Tax Digital, and the build up to Brexit.”

Linda Skilbeck, Vice-Chair of CIOT’s Indirect Taxes Sub-committee, said: “We are concerned about the combination of a substantial lack of awareness, and lack of preparedness even among those businesses who are aware of the measures.

“We urge the Government to delay the current implementation date. A start date of 1 April 2020 is more appropriate. This should allow time for a dedicated information campaign to be operated by HMRC, with the assistance of industry and professional bodies.

“The aim of the domestic reverse charge is to combat missing trader fraud in the construction sector. The CIOT supports actions to tackle tax evasion. However, there must be a balance between countering fraud and disrupting genuine business, and the CIOT considers there will be considerable burdens to affected taxpayers from this lack of publicity.”

Premier Tax Solutions has offices at Daisy Bank House business centre, Cheadle and at Raymond Street, Hanley, Stoke-on-Trent.

Time to fight the late payment culture which harms UK business

New research has revealed 37% of small businesses owners have considered closing their company because of cash flow issues caused by late payments.

The findings highlight the scale of the late payments challenge facing British small businesses, who are owed an average of £23,360 in overdue invoices on any one day and have to wait on average 14 days after the due date to be paid.

The research, by accounting software Xero, showed that the amount owed to small businesses in late payments on any given day in February 2019, was up 17% from the year before, demonstrating the startling growth in tardy payment practices.

At Premier Tax Solutions, we are a Xero Gold partner and are fully behind the campaign to highlight slow payment for smaller businesses, said Director Vanessa Fuller.

“The impact of late payments has a damaging effect across the whole UK economy as, on average in any given month, 48% of invoices issued by small businesses are paid late, and as a result a quarter of small business owners struggle to pay their own suppliers on time.

“Clearly, this has a direct impact on a company’s viability and cash flow, but late payments also negatively impact small business owners’ lives outside work. The research shows that over the last 12 months, over half have used personal savings or borrowed from friends and family to keep their business alive, while a quarter said they would enjoy better physical health if late payments were no longer an issue.”

“Over two fifths said that late payments caused them sleepless nights and affected their mental health.”

Vanessa also welcomed a recent initiative in which  Xero has teamed up with PayPal to help make it easier for customers to pay invoices. By adding PayPal as a payment option to an invoice, customers can get paid up to 21 days faster using their PayPal account or credit card.

If you’d like help with getting paid faster we can help you to set up payment systems that link with Xero that can take payments for you and can even build credit control into the process. For more information call us on 01782 479699.

What is the construction industry reverse charge scheme?

What is the construction industry reverse charge scheme?


From 1 Oct 2019 there will be a significant change in the way the vat system works for those in the construction industry due to the introduction of the reverse charge. Businesses that buy & sell construction services are likely to be affected however it will not apply to zero rated supplies of construction services.


It is being introduced as an anti fraud measure which should remove the opportunity for fraudsters to charge VAT and go missing before paying it over to HMRC.


Effectively the reverse charge is a mechanism where the customer charges themselves VAT rather than the supplier charging VAT. As the reverse charge makes it the customers responsibility to account for VAT there is no opportunity for the supplier to disappear without paying money over to HMRC.


The reverse charge will apply to business to business supplies of certain services between vat registered businesses where the recipient then makes an onward supply of the same construction services. Originally it was said to apply to labour only but HMRC state it will cover the provision of construction services which includes materials. The value of the reverse charge services received will not count towards the VAT registration threshold for the customer which is positive news for the smaller businesses.


The reverse charge will not apply to:

  • Zero rated supplies
  • Services that are supplied to an end user such as a property owner or directly to a main contractor that sells a newly completed building to a customer
  • Circumstances where the supplier and recipient are landlord and tenant
  • Circumstances where the recipient makes onward supplies of those construction services to a connected company


If you are wondering whether you’ll be affected by this or would like more information then please call us on 01782 479699 to speak with one of our construction industry tax specialists.

Getting ready for Making Tax Digital with Xero

Making Tax Digital is now here, but there’s no need to panic.

We know that there are still business owners who carry around a bag full of receipts but switching to online accounting with Premier Tax Solutions is simple and is guaranteed to make your business easy to manage.

All of our VAT registered clients use Xero online software. This means they have nothing to worry about now Making Tax Digital has come into force on 1st April – everything is done for you.

Xero takes care of the new quarterly tax reporting rules. Your VAT figures are relayed automatically to HMRC, you don’t have to lift a finger.

Premier Tax Solutions are Xero Gold partners and we are ready to support any businesses who have still not made the move to Cloud accounting.

We can even offer support to businesses looking to go digital, working alongside the company’s traditional account, if this suits your business needs.

Making Tax Digital means VAT-registered businesses with taxable turnover above the VAT threshold of £85,000 must use the service to keep records digitally and have compatible software to submit VAT returns.

But this could be good for your business as analysis from Xero suggests not using software means many small businesses lose out on growth in their early years as owners grapple to understand regulation and struggle to keep adequate financial records.

Xero say that nearly 90 per cent – or 4.9million – of small business owners admit feeling ‘overwhelmed’ by regulation when starting up. They also found two thirds of small firms admitted to having less than one day’s corporate financial experience or business education prior to the launch of their business.

Gary Turner, co-founder of Xero, said: “Small business owners feel overwhelmed by paperwork and rules they don’t have time to get to grips with. Many may see Make Tax Digital as another thorn in their side, but our research also shows that once business owners get on top of their finances, these businesses often prosper more quickly.”

Research from Xero shows that more than three quarters of small business owners had never submitted a tax return before starting up. Furthermore, two thirds admit they’ve been hit with tax return fines – with the most common fine being between £300 and £400.

Around 50,000 SMEs fail each year due to cash flow issues.

According to more than a quarter of SMEs, using digital accounting has saved them time.

Meanwhile, 22 per cent say it has saved them money and has encouraged entrepreneurism, helping trigger future start-ups.

To find out more about how we can help, call us on 01782 479699 or email