Written by: Keith Tully
Published: 13th September 2016
The frequency with which HM Revenue & Customs (HMRC) is stepping in to seize assets of companies who are heavily in debt increased sharply over the past year.
According to the business finance portal Funding Options, there were as many as 1,592 instances of HMRC asset seizure during the year 2015/16, as compared with just 649 during 2014/15.
Those figures represent a year-on-year increase of 145 per cent in the number of seizures being counted on an annual basis, with the value of debts being recovered having risen from £15.3 million to £42.6 million.
In cases where a business is unable to repay the debts owed to HMRC, the UK’s main tax-gathering body is effectively able to take ownership of certain assets which might then be sold at auction to recover some of the monies owed.
According to Funding Options, the sharp rise in instances of asset seizure suggests that while HMRC still sees this practice as a last resort option, it is clearly clamping down on business debtors and companies who leave their tax bills unpaid and overdue for extended periods.
“With the stark rise in asset seizing it’s clear that HMRC is cracking down on those businesses with overdue tax bills,” said Conrad Ford, Funding Options’ chief executive in a statement.
“Businesses must ensure they have sufficient funding in place to pay tax bills on time, without taking up capital from other aspects of the business.
“Small businesses in particular will also need capital in order to invest in and grow their business so it’s vital there is also cash left over for this purpose, after the important bills have been paid.”
Ford from Funding Options encourages company bosses to familiarise themselves with the variety of financial solutions that are available to small and medium-sized businesses beyond traditional lenders if they are finding it difficult to satisfy their creditors.
Another means through which HMRC is currently seeking to maximise the revenues paid to the Treasury each year is Accelerated Payment Notices (APNs).
APN’s effectively demand upfront payment of potentially disputed tax amounts and have proven controversial in some quarters but are understood to have brought in close to £3 billion since HMRC started using them in 2014.