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What does the letter say?
“Please pay £XXX.
“We have written to you about paying your Corporation Tax but you still owe the amount shown above. We will now pass your debt to a Debt Collection Agency.
“There is still time to stop us taking this action but you need to act fast. We are still charging you interest daily. You are incurring more costs every day.”
What does this letter mean?
Corporation tax is a tax charged on company profits, usually levied at 20%. If you are a director of a limited company, it is your responsibility to file accounts and report on your profits accurately in order for HMRC to ensure that the correct amount of tax can be levied.
Corporation tax is mandatory and something you will need to ensure is paid on time – i.e. within nine months of your year-end. If you are unable to do so and have failed to resolve the issue after a period of time – i.e. still unable to pay or have not negotiated a time-to-pay arrangement with HMRC – then it is likely you will receive this letter.
If your company is unable to meet its tax liabilities as and when they fall due, i.e. being unable to pay corporation tax, the company is, therefore, insolvent.