A self employed friend of mine is struggling with tax bills that go way back and the IR keep adding interest and although he is paying almost half his income to them the total amount owed never seems to go down. What would happen to him if he was forced into bankruptcy - are the Inland Revenue a creditor or would he be prosecuted for non payment?
Even if HMRC are his only creditor he could look at an IVA if it is the correct option. This would allow him to restart and have the older debts put into a separate 'pot' and his business could then grow. Future profits pay ongoing liabilities while paying a dividend to the older debt and HMRC are not ogres impossible to deal with.
He should get some free advice and if he has any outstanding returns he should get them submitted. HMRC can forgive debt but they see no justification for non completion of statutory forms.
Michael is right - and I have several ongoing IVAs where HMRC are the only creditor.
The key is to identifying why this debt has built up over the period of time, and to ensuring that the cause of this no longer exists. Persistent failure to settle HMRC liabilities may well indicate a less than profitable - or even a loss-making business - and once thing HMRC do not like to see is the withholding of Crown monies as unauthorised working capital.