By Tim Corfield
There were 3848 winding up petitions in 2015 (compared to 3074 in 2014) issued by HMRC against companies unable to pay their tax bills. This represents a huge rise of 13%!
These figures highlight those businesses that get into financial difficulties and do not pay VAT, PAYE or Corporation tax on time, or not at all. Without pressure from HMRC these debts can build up. In these days where it is difficult to obtain traditional finance, HMRC can be used as a lender of working capital.
HMRC are anxious to dispel the image that it is a soft touch or that the unauthorised late payment of taxes is in any way acceptable for a business to resolve cash flow problems. HMRC encourage contact from business owners as soon as they can foresee a period of cash flow difficulties and they will usually agree a time to pay arrangement (depending on the historical compliance and circumstances surrounding the current problems).
The real time filing system now introduced should help HMRC monitor companies where debts are building up. HMRC has historically been very poor at intervening at an early stage to help businesses manage their tax bills.
It is rare to see a company enter into an insolvency process where HMRC are not a major creditor – HMRC certainly have a massive interest in policing arrears of taxes.
If you come across any client with arrears of taxes or struggling with cash flow, please don’t hesitate to call us to pick our brains and help come up with the best plan for your client. We’d be delighted to help!
We have offices in Birmingham, Bournemouth, Cannock, Hereford, Redditch, Rugeley, Shrewsbury, Stafford, Stoke, Tamworth, Walsall and Wolverhampton.