HMRC to beef up moves to shut-down companies that don't pay tax
HMRC are getting tough, apparently, with their attempts to shut down firms that are late paying their tax. Cases of closed-down companies have jumped 57% in a year, according to a new survey.
Business botherers, Wilkins Kennedy, have said HMRC presented 5,302 petitions to wind up those paying late in the year ending March 31 last year, compared to 3,367 in the previous period.
After businesses enter "compulsory liquidation" following a winding up order, a liquidator can be appointed to sell off assets to generate cash to pay creditors. HMRC can also use the orders to reclaim debts from unpaid tax.
Anthony Cork, partner at Wilkins Kennedy, said: "When businesses run into trouble, often one of the first things they do is try to delay tax payments to help manage their cash flow - this puts businesses on a collision course with HMRC. HMRC does not like being used as a 'lender of first resort', and is keen to dispel the image that it is a soft touch or that the unauthorised late payment of taxes is an acceptable way for a business to resolve cash flow problems."
HMRC got tough with some high profile cases too, with Comet getting kicked around over £26m in unpaid VAT and payroll taxes, as well as Chester City and Rangers feeling the force of the tax office. Cork added: "Businesses need to be very careful about getting on the wrong side of HMRC - these figures show HMRC has become increasingly unwilling to compromise in its pursuit of missing taxes."
HMRC told Sky News that they're not trying to be bullies: "HMRC's aim is not to wind up companies or make individuals bankrupt, but to collect, as efficiently as we can, the debts that are due. HMRC only initiates winding up or bankruptcy action where it believes this is the best course of action to protect the interests of the Exchequer in respect of a particular debt. We do not take such action lightly."
"Anyone who is struggling to pay an HMRC debt should call us. HMRC has an outstanding track record in supporting those who are experiencing genuine difficulty paying their debts, and this approach will continue."