Small business owners say that the taxman is “taking an increasingly aggressive line” in chasing overdue tax.
According to restructuring specialist Begbies Traynor, many directors of small and medium-sized businesses say that HMRC is being particularly tough on those who have defaulted on Time-to-Pay tax arrangements.
Ric Traynor, executive chairman of Begbies Traynor, said: “Many directors say that HMRC is taking an increasingly aggressive line in chasing debts, particularly those who have defaulted on time-to-pay arrangements.”
However, HMRC told SmallBusiness: “HMRC is taking an understanding and supportive approach to dealing with those who have tax debts, and wants to work with businesses to find the best possible solution, based on their specific financial circumstances.
“If someone in a Time to Pay arrangement misses a payment, HMRC will contact them to find out why. Where possible, HMRC will restore the payment arrangement or renegotiate it with them.”
Small business defaults
Meanwhile, according to the Bank of England, there has been a 44 per rise in small businesses defaulting on business loans.
>See also: What happens if I can’t repay my Bounce Back Loan?
Traynor said: “There is real concern amongst many SME directors about their ability to pay back Government-backed Bounce Back Loans with many directors exploring short to medium term insolvency options.”
£20bn of loans to be written off
Buried in the figures sprayed out in last week’s Autumn Budget, was an Office for Budget Responsibility forecast that £19.7bn worth of Bounce Back Loans are predicted to be written off when loans are not paid back.
That figure equates to building 656 schools, each hosting around 1,300 pupils, or paying the first year salary of 766,000 first-year teachers outside of London, according to Equifax UK.
Phil McGilvray, managing director of debt services at Equifax UK, said: “That is a huge amount of money to wave goodbye to, especially given that, as the Chancellor said himself: ‘this is not the Government’s money but taxpayers money’. It is only right that BBLS lenders and the government recover as much as they can.
Meanwhile, the number of county court judgments lodged against companies in the three months to the end of September was 21,764 – a rise of 51 per cent on the previous quarter.
Begbies Traynor, which last week warned that more than half of UK small businesses are carrying “toxic debt” they might struggle to repay over the next 12 months, warned that the latest CCJ figures painted a “gloomy picture” for future insolvencies.
In the third quarter, 155 companies fell into administration or receivership, a 26 per cent rise on the previous quarter, according to Interpath Advisory, another restructuring firm.
Further reading
Too many businesses were in distress pre Covid. Whether that be due to dated services / products, lack of skills and knowledge of running a business, especially in the new digital age. Increasing business rates/costs is too much for companies on a tight margin. Throw in shutting down the economy for 18 months what do we expect? Now the government assistance has stopped the true affects of Covd will come to light. Your local high street will show you the true economy as government numbers IE unemployment / inflation are extremely manipulated. Good luck all