HMRC is adopting an “increasingly aggressive stance” over tax debt recovery, according to a prominent tax expert.
The latest manifestation of the Revenue’s progressively more hard-line efforts to collect every penny of tax owed comes in the form of a sharp rise in the number of winding-up petitions it filed during the last tax year. The total number hit 4,147, which is a rise of 11% on the 3,733 filed during the previous year.
The petitions are one of the most potent weapons in the Revenue’s armoury, granting the taxman powers to force businesses with unpaid tax bills to be sold. The assets are then liquidated to recoup the outstanding tax.
Those in the UK’s professional contracting community working through their own limited companies may be especially vulnerable in the face of a winding-up petition, with little access to alternative funds to pay outstanding tax debts. It would seem to be far safer to freelance through Umbrella Companies, where tax and NICs are deducted automatically on a PAYE basis.
Tax expert Peter Alderson, MD of finance provider LDF, said: “HMRC is still under huge pressure to get all their tax receipts in and wants to be seen to be taking a tough stance against those who don’t pay up on time. This jump in winding-up petitions in the last year shows that it is now prepared to go to much greater lengths than previously in order to recover unpaid tax. Despite having other heavyweight tools at its disposal such as the power of distraint, which allows it to seize a debtor’s assets, HMRC appears to be taking an increasingly aggressive stance.”