Written by: Keith Tully
Date: Friday 23rd February, 2018
The number of winding up petitions sought by HMRC over the course of last year increased by 21 per cent to reach a five-year high.
Figures from the business finance website Funding Options show that there were a total of 4,710 winding up petitions filed by the UK’s main tax-gathering body in the 12 months to the end of December 2017.
That number compares with 3,906 for the previous year and 3,485 for 2015, with winding up petitions being the means through which HMRC aims to put companies out of business in order to recover tax amounts it is owed.
Winding up petitions can lead swiftly to companies being closed down and having their assets liquidated on the basis of court orders so that HMRC can raise funds to settle outstanding tax-related debts.
The recent rises in the number of winding up petitions being filed by HMRC are being taken as a sign that a growing number of small businesses across the UK are finding it difficult or impossible to cover their VAT and corporation tax bills.
According to the assessment of Funding Options, a major cause of this rising inability among small businesses to settle their tax debts is the problem of “endemic late payments by bigger customers”.
The company has pointed out that because VAT is calculated and billed on the basis of amounts that businesses invoice their customers, there is scope for significant and damaging shortfalls when their invoices go unpaid for extended periods.
Another potential problem for some small business bosses is that they are now no longer allowed to make payments to HMRC via credit cards as a result of recent rule changes.
“HMRC should cut businesses more slack or risk making the post-Brexit environment for small businesses even worse,” says Conrad Ford, the founder of Funding Options.
“Despite reassurances it is still very difficult for businesses to get HMRC to give them ‘time to pay.’
“Businesses behind on their tax bills will already be on HMRC's radar, so they must get finance in place before HMRC comes knocking on their door.”
20th June 2018
Operators within the UK’s construction sector will soon be required to account for their VAT liabilities in a different way.Read More
19th June 2018
Small and medium scale construction companies in the UK are seeing their finances impacted badly by problems with late payments.Read More