HM Revenue & Customs (HMRC) applied to close 12% more businesses in 2016 than the previous year due to unpaid tax, according to online business finance supermarket, Funding Options.
Funding Options says that HMRC filed 3,906 applications to close businesses over unpaid tax last year, up from 3,485 in 2015.
The business finance website believes that if the tax authority is successful in securing a winding up order from the courts, businesses will be forced to close its doors, with any assets liquidated to pay overdue tax bills.
The figures underline just how far HMRC is prepared to go to recover the tax it is owed, according to Funding Options, with the tax authority under increasing political pressure to clamp down on businesses perceived to be failing to pay their fair share of tax to the Exchequer.
Of the 3,906 winding up applications made by HMRC in 2016, 2,065 were successfully obtained, up from 1,944 in 2015. Funding Options urges business owners to consider alternative options in advance of tax bills becoming due to avoid triggering this ‘nuclear’ option.
Conrad Ford, CEO of Funding Options, said: “Shutting a company down is the biggest weapon in HMRC’s arsenal, but it’s one the taxman is using more and more.
“HMRC faces a difficult balancing act of whether it should aggressively shut down businesses.
“In these extreme circumstances, companies may have some difficult choices to make between paying employees or suppliers and paying their tax bill.
“It’s vital that businesses don’t stick their heads in the sand: SMEs 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.”
If you are concerned about your business' tax liabilities, your local TaxAssist Accountant can help you get your finances in order. To arrange an initial consultation with your nearest TaxAssist expert, call us today on 0800 0523 555 or drop us a line using our online enquiry form.