HMRC steps up asset seizures over late tax payments
Posted by Natalie Brandweiner in Finances on Tue, 15/11/2011 - 14:44
HM Revenue and Revenue's increased use of powers to seize assets from late-paying businesses is driving small firms to insolvency, according to experts.
The number of times HMRC has used its laws to take over assets from late-paying companies has quadrupled in two years, rising to 7,004 in the 12 months to April 2011 from 1,675 cases two years ago, reported law firm McGrigors.
The department's seizure of key assets that help a business trade through its difficulties is ‘overzealous’, and forcing businesses that might otherwise recover to close, warned McGrigors.
The firm also argued that the 'aggresive approach' directly contradicts HMRC's ‘Time to Pay' scheme, which aims to support small businesses through the negotiation of late payments.
Stuart McNeill from McGrigors said: "If they don’t take an informed commercial view they may be dealing the killer blow to some companies with a good chance of survival and increasing the unemployment figures to boot.
"Anecdotal evidence suggests that businesses who repaid debts once before under the ‘Time to Pay scheme’ are now finding it nearly impossible to get a second chance to use the scheme, despite their track record of repayment."
"Combined with the increased use of distraint, this could mean that viable businesses are being denied a vital life line," said McNeill.
Responding to the claim, a HMRC spokesperson told BusinessZone.co.uk's sister site AccountingWEB.co.uk: "The number of distraint visits has increased but cases where this leads to seizures is very small. In 99% of cases, HMRC receives the money owed before having to seize assets.
"HMRC is becoming more efficient in seizing money, that's our job, but seizing assets is the last resort. HMRC purely uses its powers to seize assets of businesses who owe us tax when all other avenues have been entirely exhausted."
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