In business, companies will enter into contracts or trade agreements with suppliers and customers by a matter of choice. However, H M Revenue & Customs (“HMRC”) have no choice. They are an involuntary creditor who must engage in tax compliance relationships.
The current business climate indicates cash flow remains one of the main threats to company survival and, at PBC, we hear claims that because HMRC are not providing that urgent supply or service required, payment of the taxes is not given any priority. Given that HMRC have more (and expedient) powers of enforcement and recovery than most suppliers, this is wrong.
In two recent reported cases, HMRC:
- Continued with their petition, notwithstanding the company in question had already entered into voluntary liquidation. The company was wound up by the court on the basis intense investigations were needed surrounding tax evasion and, in the interests of creditors as a whole the compulsory liquidation was more justified than a voluntary liquidation.
- Exercised their powers to have a company wound up in the public interest. This was a company that promoted debt avoidance schemes and the court agreed the operation was detrimental to the taxpayer and the winding up made.
Certainly, at PBC we have noticed a significant uplift in enforcement activity by HMRC and PBC are administering the liquidations of several where there has been tax avoidance or evasion. These cases can lead to personal liability against directors.
HMRC officers are currently more proactive, seeking to attach HMRC debt to company assets, which could ultimately result in that company being so disabled, it is forced to cease trading. Generally, HMRC will give you a lot of warnings but, all too often, these warnings are ignored until that warning becomes an enforcement action.
As mentioned, HMRC are not “Trading” with a company. They do not have that trading relationship but they do have a duty to maximise tax receipts. Ignoring their threats is misconceived because HMRC will carry out those recovery threats if needed. However, we find they are willing to being open and candid in a continuous dialogue with them which can often result in a manageable way forward.
If you are struggling with tax liabilities and need any advice or assistance, or on any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.