Small businesses in the firing lineHMRC was recently accused of ?aggressively? seizing more assets than ever from small businesses struggling to pay tax bills in cash. There has been a 45% jump in the number of businesses having their assets seized in the last 12 months ? from 1,953 to 2,833. Rules allow HMRC to even seize business critical assets such as IT systems or machinery, the removal of which could lead to the closure of a business. A study found that ?69.7m was raised by HMRC from the sale of the assets it seized last year, up 67% from ?41.6m in the previous year.
2019 loan chargeThe 2019 loan charge, introduced in the Finance Act 2017 to combat ?disguised remuneration? schemes, were cited by the report as leaving low-paid workers in unpayable debt. The schemes, a form of tax avoidance heavily marketed to the self-employed, saw employers pay substantial amounts to an employee benefit trust, and paid to the employee by way of a loan to avoid National Insurance Contributions (NICs). Directed by the government, HMRC has been charging income tax on the value of all loans made under these schemes. The committee cited evidence that suggested loan charges were “disproportionate and unfair”. The evidence reported a case of a public sector contractor made redundant by a local council. “It had a farewell party on the Friday, and on the Monday it said ‘If you join this agency and use the scheme, we will re-engage you as a contractor.’ “She was re-engaged as a contractor for five years but at the end of the five years, the council told her it would re-employ her as an employee, which it did.
“She was unaware of what was going on. She now faces a loan charge equal to probably a year and a half’s salary. She has no means of paying it.”In its recommendations, the report said HMRC should review all loan charge cases where the only remaining consideration was the individual’s ability to pay, as well as establishing a dedicated helpline to give advice and support to those affected by the loan charge. The committee said action should take place “well in advance” of the loan charge coming into effect in April 2019. Read more about HMRC:
- ?120,000 VAT scam exposed: HMRC sentences small business owner
- HMRC slammed for concealing Brexit reality from 100,000 small businesses
- HMRC seizes assets from almost 2,000 small businesses in a year
Could self-employed ?tax grab? swing an imminent election? The 40 MPs under threat New research has revealed as many as 85 MPs could lose their seat if they back the introduction of IR35 into the private sector. __________________________________________________________________________________
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