1,887 SMEs shut down in 2014 for unpaid tax bills
1st July 2015 | News
HM Revenue and Customs (HMRC) sought to close down 3,000 small businesses last year for failing to meet unpaid tax bills, according to new research.
The report, carried out by Funding Options, revealed that of the 3,000 winding up orders HMRC submitted, the tax authority was successful in closing 1,887 firms in 2014 – a four per cent increase from 1,816 in 2013.
The figures have been unveiled at a key juncture in the calendar for SMEs as July 31st is the upcoming deadline for which small businesses paying self-assessment tax must make a significant payment on account.
Once a business is wound up, HMRC effectively sells of its assets in an effort to retrieve the value of the unpaid tax bills.
Financial planning for small businesses can sometimes be made more difficult as tax can be owed before they even receive the revenue the figure is based on.
VAT bills are due according to the dates that invoices are issued, no matter whether they have been paid or not.
Unincorporated businesses must also pay half of their tax bill for the following year in advance at the end of this month.
Cash flow for SMEs can also be precarious given that increasing costs such as insurance premiums and unpaid key invoices are entirely out of their control.
Conrad Ford, chief executive, Funding Options, said: “For small businesses looking nervously at the upcoming July 31 tax payment deadline, the need to get funding in place to cover the payments is now pressing.
“Funding to cover tax bills is an area we are seeing increasing demand for. It’s not something banks are keen to lend for, leaving businesses having to find other funding options.
“Although HMRC does attempt to resolve issues with businesses, it can only wait so long if arrears are building.
“SMEs need to plan ahead to identify ways that they can manage their cash flow more effectively, such as alternative finance to spread the cost and mitigate the risk of major financial shocks such as bad debts or sudden cost hikes.”
If you’re struggling to prepare your business finances and work out your tax obligations, your local TaxAssist Accountant can help.
Whether you’re just starting out or have been in business for a long time, arrange your free initial consultation with your nearest TaxAssist branch using our online enquiry form or by calling 0800 0523 555.