HMRC tackles unpaid tax by shutting down more firms

HMRC applied to shut down more businesses in 2016 than in the year previously as part of tackling unpaid tax bills.

A 12% rise in applications to wind up businesses was noted between 2015 and 2016, when 3,485 and 3,906 were targeted respectively.

The data from Funding Options reveals a growing number of businesses that could be forced to close, should HMRC be successful in obtaining a winding up order.

In such an instance, the assets of the business would be liquidated in order to cover outstanding tax bills.

According to the survey, it highlights a tougher stance by HMRC to recover unpaid tax in light of political pressures to do so.

In addition to facing a winding up petition, HMRC can also seize business assets and levy penalties on those that do not pay any arrears.

The current economic climate can place pressures on business cash flow too, especially for smaller firms who operate on increasingly tight margins or who are unable to source finance, be it via alternative finance options or traditional means such as banks.

The research notes that HMRC was able to successfully obtain 2,065 winding up orders in 2016, a rise from 1,944 in the year previously.

For a business experiencing VAT and PAYE arrears or unpaid tax issues, they should seek HMRC Time to Pay services to provide guidance.

This should help to overcome the issues faced, especially if a business finds itself unable to cover any bills for whatever reason.

Invoice finance, crowdfunding, asset finance and peer-to-peer lending are all being used by businesses to avoid unpaid bills.

The research also claims that businesses are increasingly being forced to decide between covering their tax liabilities and paying their staff or suppliers when times are difficult.

Businesses are encouraged to plan ahead and to ensure that they have a certain level of funding available to cover any unforeseen issues that may arise – a proactive approach is key in that regard.

By Phil Smith

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