Can HMRC debts be included in a CVA?

Yes, HMRC debts are commonly included in CVAs and often represent a large proportion of the total liabilities. VAT, PAYE, and Corporation Tax arrears can all be compromised under a CVA, giving businesses valuable breathing space to repay over time. HMRC has strict criteria when assessing CVA proposals. They will typically require detailed cashflow forecasts, evidence of affordability, and assurance that the company is compliant with future tax obligations. If the business continues to miss payments or fails to file returns during the CVA, HMRC may withdraw support and push for enforcement. While HMRC is a powerful creditor, it will often support a CVA if it offers a better recovery than liquidation. Engaging with HMRC early, providing full transparency, and showing a realistic recovery plan are key to securing their vote. Directors should remember that HMRC is a preferential creditor for certain taxes, so their cooperation can be decisive in determining whether the CVA succeeds.