I owe hmrc vat and paye, total 20000,company still viable but vat takes my returns and subtracts from my debt, therefore I receive penalties each month
HMRC will always allocate any payments to the oldest debt so even though you think you are paying a current quarter the funds have paid off an old debt. This does then lead to penalties for non payment of the current quarter and makes the situation worse.
If you have a viable company you may need a formal arrangement to clear the old debts so get some free advice from an IP firm.
HMRC tend to be quite good in allowing formal repayment plans - what they don't like is surprises or people not sticking to what has been agreed.
Where you need to be careful is if the total amount is just one year or historic arrears going back for 3 or 4 years - they will be less forgiving with the latter.
If the company is viable you need to be demonstrating that you are making additional payments in between the quarterly payments - at this time probably £1.5k extra each month.
IVA started March 2011, Completed March 2016 and certificate issued 11 days after final payment. It was not always easy but then some of the best decisions aren't.
