New figures from HMRC reveal that it seized assets from a record-breaking 1,488 self-assessment taxpayers over the course of 2013, most of whom were self-employed.
Independent professionals contracting as Umbrella Company Employees, who pay tax on a PAYE basis, are free from the worry about getting their tax affairs in order each year; however, other self-employed freelancers have a more arduous time of it.
The independent finance provider Syscap believes that the unprecedented level of asset seizures is a direct result of the Revenue’s increased recourse to its power of ‘distraint’. This entitles the taxman to visit business premises without warning to collect unpaid taxes. Those targeted are given five days to pay, whereupon HMRC can seize business assets such as vehicles, computers and other important assets.
Distraint seizures rose from 730 in 2010/11 to 1,376 in 2011/12 and most recently to 1,488 – an 8% increase on the previous year.
Syscap believes the unprecedented use of distraint powers reflects the government’s increasingly rigid approach to recovering outstanding business tax dues. The power had previously been confined to the recovery of payroll taxes; however, it has now been extended to encompass a much wider range of tax debts, including the self-assessment taxes of small business owners – individual freelancers amongst them.
With the earlier Time to Pay scheme now wound up, there is no longer any grace period for small businesses to pay outstanding tax. Syscap anticipates that further asset seizures will be triggered by the 31st January self-assessment deadline, as many small businesses and self-employed freelancers struggle to find the money to settle their tax debts.