HMRC’s pursuit of unpaid business taxes has stepped up a level, as new figures reveal the tax office applied for a record number of court orders to seize company assets in 2016.
Research from finance advisor Funding Options found HMRC applications to liquidate firms with outstanding tax bills rose by 12 per cent in 2016 from the 3, 485 made in 2015.
Of the 3, 900 wind up applications, HMRC successfully seized the assets of 2, 065 owners with unpaid business taxes, a success rate of 53per cent.?
‘shutting a company down is the biggest weapon in HMRC’s arsenal, but it’s one the taxman is using more and more, said Conrad Ford, CEO of Funding Options.?
The high-profile case of Google, which in 2016 was reported to have owed almost 600m in unpaid business taxes to HMRC, and controversial tax evasion schemes have increased public and political pressure on the tax office to approach debt collecting with the full force of its powers.
The growing use of court orders confirmed both HMRC’s tough stance on unpaid business taxes as well as ongoing cash flow challenges faced by small UK business owners, who could be most at risk of the apparent nuclear option.?
Despite the rise of alternative finance providers, and specialist lenders such as the StartUp Loans Company and the British Business Bank (BBB), Britain’s entrepreneurs have still struggled to find the financial cushion? that can protect larger companies when VAT and corporation tax deadlines arrive.
Ford added that HMRC’s hard-line position created difficult choices? for small business owners who are struggling to pay employees, suppliers and escalating tax bills.
it’s vital that [small business owners] don’t stick their heads in the sand: they need to try to work with HMRC to prevent arrears backing up. They should also take pro-active steps to make sure they have a funding safety net readily available for when they need it, he said.
Ford advised the owners of small firms to consider the various sources of finance available to their company, such as invoice finance to boost short-term cash flow and crowdfunding to support business growth.?
the good news is that identifying the right source of funding is becoming easier thanks to the government’s Bank Referral Scheme, which provides access to alternative finance for firms unable to obtain traditional loans, he added.
The scheme involves nine high street lenders sharing details with alternative finance providers to support small business owners who have been rejected for finance.
A BBB source told Business Advice that the Bank Referral Scheme would remove barriers to financial access for small companies.
the Bank Referral Scheme acknowledges that the problem in Britain isnt with supply [of access to finance] it’s with transparency. What’s holding back growth is that small business owners don’t know where to access finance if bank’s turn them down.Have a look at other HMRC content:
- Revealed: HMRC’s ten most ridiculous self-assessment tax expense claims
- Tax body warns compliant small businesses could suffer from planned HMRC crackdown
- Going to miss the self-assessment deadline? Find out the excuses you will need
- Could you spot an HMRC phishing scam?
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