HMRC is increasingly seizing assets to collect tax debts – report
HM Revenue and Customs seized assets from a new high of nearly 1,500 self-assessed taxpayers – the majority of whom are self-employed professionals – over the past year.
A report by independent business IT finance provider Syscap suggests that self-employed people who owe tax to HMRC are increasingly likely to have their assets seized.
This latest year saw HMRC use its its power of ‘distraint’ against 1,488 self-assessment tax debtors – up eight percent on the 1,376 seizures in 2011/12, and more than double the 730 seizures of 2010/11.
HMRC’s power of distraint allows staff to visit business premises without warning in order to collect unpaid taxes. If the bill, usually including interest and penalties, is not paid within five days, HMRC can remove and sell business assets such as computers, vehicles and other key equipment, without a court order.
At the height of the recession, HMRC allowed businesses a grace period under its Time To Pay scheme. In 2009, the organisation allowed UK businesses to defer £4.5 billion in tax payments. But the Time To Pay scheme has now been virtually wound up, with HMRC instead targeting an overall revenue increase of £7 billion per year by 2014/15.
Friday’s tax bill deadline could trigger another wave of enforcement action as small professional firms struggle to find funding for their tax bills. If these businesses fail to find funding, it can set the wheels of enforcement action in motion, which may lead to business asset seizures, potentially destroying their ability to do business, warns Syscap.
Syscap CEO Philip White said: “Small businesses facing cashflow problems as the January 31 tax deadline looms need to take immediate steps to secure funding. HMRC is more likely than ever to take a draconian approach to tax debts.”
Syscap adds that the January 31 deadline is not the only tax bill facing small businesses in the coming weeks. VAT bills for the fourth quarter of 2013 are due to be paid by February 7.