Thursday, 03 May 2012 13:21
Businesses who fail to make their payments on time are at growing risk of having their assets seized by HMRC.
HMRC is increasingly using its powers to seize businesses assets in order to recover unpaid VAT bills, reveals new figures obtained by Syscap. Last year, HMRC used its powers of distraint 2,401 times, seizing the assets of businesses who had failed to pay their VAT. This is more than double (161%) the number of cases from 921 in the previous year.
With just days to go before the May 7th deadline to pay VAT (deadline for businesses with accounting periods to March 31st), Syscap warns that businesses who fail to make their payments on time are at growing risk of having their assets seized by HMRC.
Philip White, CEO of Syscap, explains: "HMRC had previously reserved its use of distraint to recover unpaid payroll tax. However, since the recession it has been far more active in recovering other types of unpaid tax, most notably VAT. Smaller businesses with a heavy reliance on expensive machinery are at most risk if they are unable to make their payments. HMRC can simply turn up and repossess assets which play an important role in the business, seriously impairing their efforts to trade.
"While HMRC will not force a business to sell its essential assets to pay a tax debt, it may expect them to sell more liquid assets. However, forcing businesses into a fire sale of its assets could set them back significantly as they are likely to only recover a fraction of the assets value when sold at such short notice. At that rate, businesses may have to sell a significant amount of its assets, particularly if they are facing large VAT bills.
"SMEs may well feel singled out by HMRCs approach. Bigger businesses, while likely to face higher VAT bills, also have a lot more funding options available to them."
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