HM Revenue and Customs (HMRC) has increased winding-up petitions by 11 per cent, as part of a hard-line approach to recover unpaid tax from UK firms.
In the year leading up to 31st March 2014, HMRC filed 4,147 winding-up petitions, and wants to be seen to be taking a tough stance against those who don’t pay up on time.
Winding-up petitions are the most powerful tools in the HMRC arsenal. If granted, the tax authority can force a business to be sold and have its remaining assets liquidated in order to retrieve as much outstanding tax as possible.
Peter Alderson, managing director at LDF, said: “HMRC is still under huge pressure to get all its tax receipts in and wants to be seen to be taking a tough stance against those who don’t pay up on time.
“This jump in winding-up petitions in the last year shows that it is now prepared to go to much greater lengths than previously in order to recover unpaid tax.”
However, HMRC has hit back at the claims, labelling them as “misleading”.
According to LDF, UK businesses still owe £6.2 billion in overdue VAT, with many smaller firms struggling to cough up.
“Even though the recession is now technically over, cash flow is still an issue for many businesses,” added Mr Alderson.
“Smaller companies in particular can be more prone to difficulties in paying tax bills on time – but that doesn’t mean that they aren’t solvent, successful businesses.”
With fewer available funding options open to smaller firms, Alderson suggests SMEs are more susceptible to cash flow problems, which make huge VAT bills an even greater issue.
However, a spokesperson for HMRC, revealed that the year-on-year ebb and flow of court orders made the comparison unreliable.
“We only initiate winding-up action where we believe this is the best course of action to protect the interests of the Exchequer, in respect of a particular debt.
“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.”
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