Number of businesses having assets seized after failing to pay tax triples
The number of small and medium-sized enterprises (SMEs) that have assets seized by HM Revenue and Customs (HMRC) over unpaid taxes has increased at an alarming rate, a report says.
In 2015/16, around 1,592 businesses had assets seized by HMRC – more than triple that of the 649 businesses in 2014/15.
HMRC can legally seize assets when businesses fail to pay outstanding debts, which are then auctioned off to generate the monies owed, the report says.
According to business loan adviser, Funding Options, this “increasingly aggressive method” often leaves companies with less than they started with.
Conrad Ford, CEO of Funding Options, said: “With the stark rise in asset seizing it’s clear that HMRC are cracking down on those businesses with overdue tax bills.
“Businesses must ensure they have sufficient funding in place to pay tax bills on time, without taking up capital from other aspects of the business.”
The report found that the risk of seizure is even larger for small businesses, as banks are often reluctant to lend money.
“Small businesses in particular will also need capital in order to invest in and grow their business so its vital there is also cash left over for this purpose, after the important bills have been paid,” said Mr Ford.
“With pressure on HMRC to increase tax receipts, it’s becoming increasingly important that businesses make sure their tax affairs are in order and bills are paid on time.”