PAYE arrears. Handle it calmly.
PAYE and NIC due the 22nd of each month. Miss three months and HMRC escalates fast. Field Force officers visit within 30 to 60 days of ongoing arrears. Borrow to pay before the visit.
10+
Specialist lenders
Direct
To HMRC
£10k–£500k
Typical range
3–9mo
Term
What PAYE arrears funding is
Short-term commercial finance to clear HMRC and reset.
PAYE and NIC liabilities are due on the 22nd of the month following payroll. Miss one month and you accrue interest. Miss two or more and HMRC moves through their escalation process. Letters, phone calls, and eventually formal collection action.
PAYE arrears funding is a short-term commercial loan structured specifically to clear the outstanding HMRC balance and put you back on a clean compliance record. Slightly more cautious lender appetite than VAT or CT (PAYE arrears signal cash pressure), but available and arrangeable for bills up to around £250k.
The honest read on where this fits: if the underlying business is healthy and this is a one-off timing problem (seasonal payroll surge, delayed receivable), a PAYE loan works well. If PAYE arrears are accumulating quarter after quarter alongside VAT arrears, commercial finance is a sticking plaster on a deeper wound. In those cases we'd suggest a conversation with your accountant first.
RATES & TERMS · APRIL 2026
Typical parameters for this product.
INDICATIVE
1.2–2.0%
Monthly rate
1–2.5%
Arrangement fee
3, 6, 9 mo
Term
£10k–£500k
Loan amount
HOW IT WORKS
Three steps. No drama.
1
Apply with current arrears detail
We need to know the amount owed, how far behind, and whether HMRC has taken any formal action yet.
2
We route to the right lender
Lender appetite varies more here than for VAT. Some decline, some approve at standard rates. We route to the right fit.
3
Paid direct to HMRC
Lender settles the full arrears on receipt of signed documents. Compliance record clean the same day.
Model your PAYE arrears
PAYE ARREARS
PAYE loan calculator
Model the cost of clearing PAYE arrears across 3 to 12 months.
Term
Monthly repayment
£7,187
per month for 6 months
- Setup fee (1%)£400
- Total interest£3,120
- Total cost of borrowing£3,520
Indicative only. Based on a typical rate of 1.3% per month plus a 1% setup fee. Final rate depends on lender appetite and your business profile.
QUESTIONS WE GET
Straight answers.
Will HMRC still pursue us if we have a loan to pay them?
Once HMRC receives the payment (from the lender on your behalf), your account is cleared. Any active enforcement stops. Your HMRC compliance record shows the balance as paid.
How long before HMRC becomes "serious" about PAYE arrears?
Informal chasing starts within 1–2 months late. Formal demand letter typically 2–4 months. Enforcement action (distraint, winding-up petition) 6+ months and usually after multiple missed contact attempts. Act early. Options narrow as time passes.
Can directors be personally liable for PAYE arrears?
In standard cases, no. Limited-company directors aren't personally liable for company tax debts. Exceptions: fraud, phoenixism (repeat insolvencies), or personal guarantees previously given. Most of our clients don't touch these exceptions.
What about CIS deductions we've withheld but not paid to HMRC?
Same framework. CIS deductions are money held in trust for HMRC. Arrears are serious but arrangeable via commercial loan or Time to Pay (TTP). Many of our construction-sector clients use this route.
Can we get a loan for future PAYE if we're expecting a gap?
Less common but yes. Some lenders will fund upcoming PAYE during a known cash-flow gap (new contract ramp-up, post-redundancy restructure). Rates typically wider than for arrears already incurred.
If you do nothing
What HMRC actually does next
HMRC is not out to get you. They have a job to do and they are good at it. These are the steps they take, in order, when a PAYE and NIC bill goes unpaid. It is not scaremongering. It is the standard debt management process. Knowing the timeline means you can act before the next step arrives.
Stage 01
Day 0: missed deadline
Late-payment interest starts accruing at 7.75% per annum. Daily, not monthly.
Stage 02
Day 15 to 30: penalty cliff
First penalty of 3% at day 15. Another 3% at day 30. Both calculated on the unpaid balance at each date.
Stage 03
Day 31 onwards: the 10% accrual
A second penalty starts accruing daily at 10% per annum until paid in full. It compounds with the interest already running.
Stage 04
Weeks 4 to 12: reminder letters and phone calls
HMRC's Debt Management and Banking team send reminders and an officer phones to demand payment. This is the window where Time to Pay (TTP) is most achievable. After this window closes, Time to Pay arrangements get harder to negotiate.
Stage 05
Weeks 8 to 16: Field Force officer visit
A locally-based HMRC officer visits the business address to confirm contact details and check the current tax position. They can negotiate settlement for debts up to £100,000 on the spot. Not a raid; standard HMRC practice.
Stage 06
Notice of Enforcement
If the visit does not resolve the debt, HMRC issues a formal Notice of Enforcement. 14 days from issue to pay in full or agree a plan. HMRC does not need a court order for this.
Stage 07
Controlled Goods Agreement
If the 14 days pass, an enforcement agent returns and lists business assets on a Controlled Goods Agreement. Seven more days to pay. After that, goods are seized and sold at auction. HMRC can force entry into commercial premises.
Stage 08
Direct Recovery of Debt
For debts over £1,000, HMRC can take money directly from business bank accounts. They must leave a minimum of £5,000 across all accounts after the recovery.
Stage 09
Winding-up petition
HMRC is the most common creditor in UK business insolvencies. A statutory demand gives 21 days to pay or dispute. Miss it, and HMRC can petition the court to wind up the company. Directors face investigation for how the company traded with the debt outstanding.
None of this is inevitable. Every stage is a decision point. The earlier you act, the more options you have. A Time to Pay arrangement before day 30 is usually achievable. Borrowing to pay the bill at any point stops the clock completely. Both are better than waiting to see what HMRC does next.
Enforcement timeline and powers per HMRC published guidance and TaxAid enforcement notes. Figures for HMRC as the largest business creditor via The Gazette and Begbies Traynor insolvency data. Rate (7.75%) sourced live from the Bank of England base rate plus 4%. Funding Flow arranges finance, does not provide insolvency or tax advice.
READY WHEN YOU ARE
PAYE bill past due? Sooner is cheaper.
Cases arranged inside 30 days of due date have significantly more options than cases 90 days past.
Get a quote →Disclaimer · The information on this page is general guidance about UK commercial finance options for limited companies and LLPs. It is not legal, tax, or financial advice and should not be relied on as such. Eligibility, rates, and terms vary by lender and are subject to credit assessment. Tax Bill Loans is a trading name of Funding Flow, a commercial finance broker; arranging finance for UK corporates is outside FCA regulatory scope. For advice specific to your situation, speak to your accountant, solicitor, or a qualified adviser.