|HMRC Raises Stakes on Winding up Orders|
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The number of winding petitions issued by the taxman has leapt significantly year on year with HM Revenue & Customs (HMRC) now accounting for more than half of all winding-up orders in 2009/2010.
HMRC was responsible for 58% of all petitions submitted over the last year, compared to 43% in the previous year, according to research by UHY Hacker Young.
Approximately 6,400 companies faced winding-up attempts by the taxman. The department was responsible for 5,600 a year earlier.
The latest statistics suggest HMRC is toughening its approach to companies struggling with their tax bills. Figures released recently showed that HMRC's rate of rejecting applications for tax deferral under the Time to Pay regime had doubled, albeit from a low base of 2.6%.
"HMRC has been willing to give struggling businesses some lee-way through their Time to Pay scheme, but that scheme seems to be winding down and this jump in attempts to liquidate businesses is a clear trend," said Roy Maugham, tax partner at UHY Hacker Young.
"The taxman is shedding the more sympathetic stance it adopted towards struggling businesses during the recession."
Maugham called on the government to give HMRC the green light to renew its commitment to Time to Pay, as tough economic conditions showed little sign of abating.
"In many cases that would be better for the Treasury coffers than pulling the plug on potentially viable businesses."
An HMRC spokesman said the department "does not recognise the figures quoted".
"The relatively small number of winding up actions - during one of the biggest economic downturns in living memory - needs to be set in the context of the extraordinarily successful Business Payment Support Service," the spokesman added.
"This service has supported UK businesses since November 2008, and by September 2010 371,000 TTP arrangements worth £6.38 billion had been granted. Of this, £5.41 billion has already been paid to HMRC.
"HMRC will continue to offer a sympathetic ear to businesses - and individuals - in temporary financial difficulty and will continue to offer this service as part of our time to pay arrangements for as long as it is needed. However, there is little HMRC can do for a business whose viability is dependent on not paying the UK taxes to which they are liable, or on special treatment not available to other customers with similar tax affairs."
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Nov.18, 2010