Running a care business has never been easy, but in today’s climate, it can feel almost impossible. Rising wage and National Insurance costs, delays in local authority payments, staffing challenges and constant uncertainty over funding have created one of the toughest ever environments for business owners. Many I have worked with describe an endless juggle of paying staff first, keeping suppliers on side, covering utilities and then realising there is not enough left to meet the tax bill. Many also feel isolated and unsure how to act – while continuing to balance the needs of staff and people drawing on care and support.
The situation across the sector is stark, as a recent Care Provider Alliance survey has highlighted. It found that 22% of care businesses are planning to close entirely, 77% will need to draw on reserves and 64% will have to make staff redundant. Against this backdrop, misconceptions about HMRC processes can quickly amplify stress and lead to unnecessary panic. The idea that ‘once HMRC is involved, it is over’ is widespread, but it is simply not true. In reality, most tax issues can be managed and resolved, often far more calmly and compassionately than business owners realise.
Having supported hundreds of business owners through financial challenges – many of whom operate in the care sector – I can confirm that clarity and early support make all the difference.
Negotiation with HMRC is possible
When a winding-up petition – or often any letter from HMRC – arrives, the first reaction from many business owners is fear. Providers might ask what a faceless institution knows about running a care business and worrying about payroll, people drawing on care and support and CQC compliance all at once. But HMRC might be more understanding than first thought. One of the most persistent misconceptions is that HMRC is rigid and unwilling to negotiate.
The truth, however, is that HMRC can be engaged with, and it does agree to payment plans – known as Time-to-Pay (TTP) arrangements – when businesses demonstrate a willingness to engage and agree to a realistic plan for repayment. These arrangements are not a sign of failure; they are a lifeline designed to give business owners breathing space. The key is to show willingness, realism and honesty. It is also vital that all filings are up to date, as HMRC will not consider anything if a business is not compliant.
The bottom line is that ignoring correspondence or delaying contact only reduces a business owner’s options. The key is early engagement, as this can help secure arrangements that are both manageable and prevent escalation. Ultimately, swift action allows business owners to avoid enforcement, maintain staff wages and continue providing essential care.
Bailiffs do not signal the end
Many business owners often assume that the involvement of enforcement officers signals the end of operations. But this is not necessarily the case. It is important to recognise that enforcement is a stage in a process, not the end of it. When HMRC instructs enforcement officers, there is still an opportunity to act, whether that is by pausing the process, negotiating repayment or restructuring the business. In many cases, enforcement action is halted once HMRC sees credible engagement from the business owner. Once again, the key takeaway for any owner is that the earlier action is taken, the more choices are available.
I have supported business owners across the care sector, reviewing restructure and rescue options, including Company Voluntary Arrangements (CVA) to help providers find a sustainable path forward. I have also helped businesses by raising funding and setting up invoice finance to clear HMRC debts while establishing affordable monthly repayments. In one case, this helped a care home save more than 65 jobs.
By connecting business owners with TTP specialists, I have secured manageable arrangements that could not have been achieved by owners alone. I have also implemented rescue plans that safeguard staff, maintain high standards of care and establish long-term repayment strategies with creditors, allowing business owners to continue operating without disruption. The key is to remain calm and seek support to understand the available options before making a decision.
Business owners are not alone
It is understandable that many business owners can feel isolated when financial pressures mount. The situation may feel unique or like a reflection of personal mismanagement, but this is not true. Financial strain across the sector is a systemic issue. Care providers are facing exactly the same pressures countrywide – delays in local authority payments, rising agency bills, increasing staff costs and cashflow pressures, to name only a few.
As difficult as it feels, there are hundreds of business owners navigating similar circumstances. Understanding that these challenges span the whole sector and are not personal can help business owners approach the situation more objectively. Two of the most important things for business owners to remember are that they are not alone and that they are not failing. Care providers are operating in one of the most underfunded, overstretched and emotionally demanding sectors in the UK.
All tax debts are not the same
Another common misunderstanding is that all tax debts carry the same weight, but in practice, some liabilities are far more urgent than others. That is why understanding the type of debt being dealt with can help business owners prioritise what to do first. Business owners who focus on the most critical obligations first, while seeking professional guidance, are better placed to manage debts effectively and maintain operational stability.
PAYE and VAT arrears tend to attract the fastest enforcement from HMRC because they represent taxes collected on behalf of others – in this case, staff and customers. These liabilities are often more onerous than Corporation Tax as this is assessed later against company profits. Knowing this hierarchy matters, as it can help business owners decide where to focus attention and where negotiation is most urgent, which helps to prevent escalation as a result.
TTP schemes are not inflexible
It is easy to think that once a TTP arrangement is agreed, it is set in stone, but while they typically last between 12 and 24 months, in some cases, longer terms can be negotiated. For example, if a care home business owner’s circumstances change because of a local authority payment delay, an unexpected cost or funding challenges, HMRC can often be approached to review and adjust the arrangement. It may agree to temporarily reduce or defer instalments, for example. Business owners should understand that TTP arrangements are not definitive and that like any business relationship, they rely on communication, trust and evidence.
It is not a failure to seek guidance
Perhaps the most damaging misconception when it comes to HMRC debt is that seeking external help is an admission of failure. Business owners often carry a deep sense of responsibility, and the thought of asking for help can feel like admitting defeat – especially in a sector where leadership means being resilient, compassionate and strong for everyone else.
It is also vital to never agree to anything with HMRC without taking advice first. Seeking help is not failure, it is one of the most responsible actions a business owner can take, and HMRC has to give time to seek consultation. Also, it is important to remember that HMRC officers are not business owners. Their role is to collect tax, not to understand the day-to-day realities of funding care homes, managing payroll or meeting compliance standards. That is why bridging that gap sometimes requires guidance from those who understand both sides.
The truth is that seeking help is not a weakness, it is simply good governance. Business owners who act early and are armed with the facts are far more likely to prevent insolvency, protect jobs and ensure continuity of care.
Supporting stability in the sector
Ultimately, the care sector’s financial fragility is not a reflection of poor leadership – it is a deep-rooted issue created by delayed payments, rising costs and persistent underfunding. When it comes to HMRC debt, many care homes have successfully turned things around. Significantly, this has been achieved not through luck, but through early action, honest communication and the right support network.
Business owners should remember that they are not alone in facing these challenges, and that by understanding the options available and seeking guidance early, they can access practical solutions, protect staff, maintain quality care and stabilise operations. With the right approach, even highly pressured owners can emerge stronger and more resilient from financial difficulties.
Can your business share any further strategies for engaging with HMRC over debt? Comment on this feature or join the conversation to share your thoughts.
Jonathan Cooper is the Founder and Director at The Director’s Helpline. Email: [email protected] X: @TDHelpline