Tax Finance for Insolvency Practitioners
When a client company has HMRC arrears that threaten viability, a structured bridging facility to clear the tax debt may allow the business to continue trading, avoid formal insolvency, and protect jobs and creditor relationships. As an insolvency practitioner, you assess viability - we provide the finance.
HMRC Arrears Rescue Finance
This page explains how DBF works alongside IPs to arrange HMRC arrears rescue bridging.
HMRC Arrears Rescue Finance - IP Referral Guide
| Arrears situation | Bridge type | Viability condition | DBF approach |
|---|---|---|---|
| VAT arrears 3-6 months | VAT arrears bridge | Business must be fundamentally viable | Security assessment on business property. Rate 0.75%-1.10%/month. |
| PAYE + NI arrears | Employment tax arrears bridge | Director HMRC enforcement paused on bridge application | Combined bridge clears all employment tax arrears. 0.75%-1.00%/month. |
| Combined VAT + CT + PAYE (multiple arrears) | Multi-liability rescue bridge | IP to confirm viability assessment in writing | Larger facility. May require multiple lenders. 0.85%-1.20%/month. |
| Pre-CVA - bridge to fund HMRC contribution | CVA support bridge | CVA proposal must be credible with IP supervision | Bridge funds the HMRC element of the CVA arrangement. Specific lenders. |
Indicative rates - August 2026. Rates change daily. Actual rate depends on LTV, security, credit profile, loan size, and exit strategy. Contact our team for a live rate comparison for your specific case. All rates sourced from lender product sheets and publicly available market data.
What determines your rate
What bridging can and cannot do in an insolvency context
Bridging can clear HMRC arrears for a fundamentally viable business that has experienced a temporary cash flow disruption. It cannot rescue a business that is structurally insolvent - where liabilities permanently exceed assets. The IP's viability assessment is the foundation of any bridging referral. We do not arrange finance for businesses that are, in the IP's professional opinion, unable to service the bridge or resume trading.
Security in an HMRC arrears scenario
Where HMRC has a charge on company assets (HMRC preferential creditor status for certain PAYE/NI arrears), the lender's security position is affected. Bridging lenders typically require a first or second charge on property - business premises or director's personal property. In HMRC arrears scenarios, the security position must be clarified before an approach to lenders.
CVA support bridging
A Company Voluntary Arrangement (CVA) requires HMRC to agree to the arrangement and may require a contribution from the company. Where the company cannot fund the HMRC contribution from cashflow, a bridging loan can provide the funds. The CVA must be credible and supervised by an IP. Not all bridging lenders are comfortable with CVA contexts - we identify lenders with specific CVA experience.
Timing alongside IP proceedings
Bridging can be arranged alongside (or as an alternative to) formal IP proceedings. Where the choice is between a bridging rescue and formal insolvency, the bridge must be arranged and completing before any formal insolvency process is commenced - formal insolvency fundamentally changes the security and authority position and makes post-commencement bridging effectively impossible for most lenders.
Worked cost example
IP referral: Manufacturing company. HMRC arrears: VAT £85,000 + PAYE £42,000 = £127,000. Business fundamentally viable - three-year order book, temporary cash flow disruption from delayed large contract. Business owns freehold factory (£650,000 value, existing mortgage £280,000 - second charge available: ~£370,000 equity).
DBF assessment: Second charge bridge on factory at 0.90%/month. Combined LTV: £407,000 / £650,000 = 62.6%. Viable.
Terms: £127,000 at 0.90%/month, 12 months. Estimated cost: £15,000 (interest + fees). Exit: contract receipt (£220,000 due in 8 months).
Outcome: Bridge arranged. HMRC arrears cleared. PAYE enforcement stopped. IP monitors exit. Contract received, bridge repaid. Business continues.
Rate context and outlook
Insolvency practitioners are an important referral source for HMRC arrears rescue finance. The IP's professional assessment of viability provides the lender with confidence that the bridge serves a genuine rescue purpose rather than delaying an inevitable insolvency. DBF works with IPs in a collaborative rather than competitive way - our service extends the toolkit available to IPs and their clients.
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Frequently asked questions
Are bridging lenders comfortable lending in HMRC arrears scenarios?
Some are, some are not. Specialist bridging lenders with experience in business rescue and turnaround finance are comfortable with HMRC arrears as a context - provided the business is fundamentally viable and the security is clear. Mainstream bridging lenders without turnaround experience may decline. DBF's lender panel includes specialists with specific HMRC arrears rescue experience.
Does HMRC need to know about the bridging loan?
HMRC's primary concern is being paid. They do not require or request information about how the payment is funded. When HMRC receives payment of the arrears (from the bridge), the arrears are cleared and any enforcement action stops - the source of the funds is irrelevant to HMRC.
Can bridging work if HMRC has already issued a winding-up petition?
This is extremely difficult - most bridging lenders will not advance funds where a winding-up petition has been issued, as it creates significant uncertainty about the company's legal status and the validity of charges. If a petition has been issued, the priority is to have it dismissed or stayed before bridging can be arranged. Legal advice on the petition alongside bridging enquiries is essential.
What is the minimum viability threshold for a HMRC rescue bridge?
The business must: (1) have a credible plan to repay the bridge from identifiable cashflow or asset sales; (2) have assets available as security with sufficient equity; (3) not be in formal insolvency proceedings; (4) have a reason for the HMRC arrears that is temporary rather than structural. An IP's confirmation that the business is viable (in their professional opinion) significantly improves lender confidence.
How do you handle cases where the IP believes formal insolvency is the right outcome?
If the IP's assessment is that formal insolvency is the right outcome, we will say so and not pursue bridging. We do not arrange finance that serves to extend a hopeless situation at the cost of creditors. Our involvement in any HMRC arrears case is conditional on the IP's professional assessment that the business is genuinely viable with the bridging.
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