Struggling business can no longer rely on getting a little extra time to pay tax bills by HMRC and are blaming their less lenient stance on the reason why so many companies are going into administration.
The Yorkshire Regional Chairman of insolvency body R3 said:-
“I would say 50% of the companies we are seeing are companies that have been in ‘time-to-pay’, fallen behind and the Revenue has decided they cant be flexible and called [the debt] in.”
A select few advisers, however, have praised HMRC’s tougher approach. One anonymous supporter said:-
“What they are doing now is what they should have done all along – due diligence.”
HMRC claimed they had not changed their policy but that it is merely a case of businesses being required to show their viability before securing extensions to their time limits to pay their tax bills.
In the past year more than 150,000 businesses have been awarded extra time to pay £4.1bn in tax.
By November 22nd, £1bn of that unpaid tax was still outstanding.
HMRC have recently faced criticism over the ever-growing amount it is owed.
Provisions for bad debts have increased by 120% over the last 3 years and by 42% to £11.2bn in 2008/09 alone.
This increased reflects the economic downturn, dwindling debt collection figures are increases in corporate and personal insolvencies.
Lord Oakeshott, Lib Dem Treasury spokesman said:-
“This rising torrent of tax bad debts, year after year in good times and bad, represents serial management failure in HMRC. Their bad debt provision last year amounted to £465 for every family in Britain. Any private businesses with this collection record would go to the wall within weeks.”
Presumably though, with the growing criticism about the tax owed, HMRC will continue to push and push businesses and people for tax and huge penalties.