The Steedman Column
The Revenue talks soft but acts tough
In last month’s article, I wrote about the seemingly softer approach the Revenue was taking with the chasing up of tax arrears.
It doesn’t seem that long ago that Alistair Darling, speaking as Chancellor of the Exchequer, made a pledge to struggling businesses and self employed tax payers, that a degree of leniency and tolerance would be shown in regards to the payment of late tax arrears. It seemed like the right thing to say and showed a refreshing degree of realism.
18 months or so later, it seems that either his words fell on deaf ears to the civil servants of HMRC, or that there was never any real intention to implement this apparently sympathetic approach.
Research by UHY Hacker Young has shown that the Revenue is by far the biggest issuer of winding up orders in the UK, submitting 43% of all orders. The government claims the
HMRC of being bloody minded and being too quick to wind up Companies who may only be temporarily struggling whilst on the long run may have solid futures.
HMRC is currently under as much pressure as it has been in living memory with the tax take being at an all time low and the money it is due in being at an all time high. Even under such critical need to get funds in to help balance the government’s books, HMRC rejects any accusation that businesses are being terminated prematurely and points to the “time to pay” scheme that was set up to allow negotiation of late tax payments.
A dedicated phone line has been set up to allow people and businesses to come to an arrangement to pay tax arrears, but this seems to be in a state of disarray. Very recently, I negotiated on behalf of a client to be told that all his arrears categorically had to be paid within a year. An hour later a call to the same number but to a different person, and I was told it would be acceptable to have it paid off in three years.
A large bulk of the reason we are in recession is of course down to the collapse of the banking system and this has had a massive impact on small businesses ability to pay tax. Previously, a struggling business may have applied for a loan in order to ward off the advances of any overeager taxman. Now that loans are as hard to come by as a penguin in a dessert, the last resort for many businesses has been to use the Revenue as a sort of bank. When the Revenue
think it’s being used as such, recovery action can become inevitable.
HMRC changed with the introduction of the
made the Revenue on equal grounds as all other entities trying to recoup debts. This has made for a more desperate clutching of funds
Anyone, from a taxi driver to a large Limited Company, need to know that the most vital thing in any arrangement to pay the Revenue tax due to them, is not to default on any payment. Even missing one pre arranged payment can result in legal proceedings and I have seen this happen to a Company that didn’t understand the consequences of defaulting.
After the General Election, whoever forms the government will have a massive task on their hands; not only by trying to make cuts in their budget but also in getting much needed money through the exchequer’s doors. Tax rises may be inevitable and the way in which they get tax may be more stringent than ever before.
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