"Giving the right advice, first time, every time"


HMRC bank is still open for business


26 June 2017:  Alan Limb, from BRI’s Southampton Office, comments that HMRC still seem generous with the amount of credit it allows some Companies. 

HMRC is an involuntary creditor. It has little control over how much businesses owe it. The only way for HMRC to stop “lending” more money to Companies that won’t pay their tax is to present a Winding Up Petition, a step that HMRC has taken nearly 1,400 times so far in 2017.

Real Time Information and Online Filing now provide HMRC with data promptly about how much PAYE and VAT Companies owe and identify those taxpayers that haven’t submitted returns. Nevertheless, HMRC does not appear to use this information efficiently to target its debt collection activity. As a result we regularly see HMRC providing far more credit to Companies than it would do if it was a trade supplier. 

For example, we can consider a selection of 5 local Companies that we have been asked to assist so far in 2017 at BRI in Southampton. They have all been trading for less than 5 years and owe £304,000 to HMRC in total. For each Company the maximum credit limit recommended for suppliers by Creditsafe has only ever been £500. In all 5 cases, HMRC is likely to suffer a significant write off.

If HMRC was more proactive in its debt collection then we believe that this would have two benefits. Obviously, the amount recovered in tax would increase. We also believe that it would result in more Companies surviving because the earlier we are asked to assist, the greater is the chance of addressing the reasons for non-payment and avoiding insolvency. 

If you have a client whose business is struggling due to the amount it owes HMRC, please contact one of the BRI team for help.