Tax complexities trouble UK SMEs
A growing number of UK businesses are failing due to debts owed to HMRC, new figures show.
According to a Freedom of Information request from Enterprise Tax Consultants, HMRC was the largest principal creditor in 65% of business liquidation cases.
It is claimed the complex nature of the UK tax system is a major factor behind this high figure - of 2,955 compulsory liquidations in the last financial year, HMRC was the largest single creditor in 1,920.
That marks an 11% rise on the figure noted five years ago, although figures from the Insolvency Service also show that liquidation cases have fallen by more than 40% in the same period.
Technical director of Enterprise Tax Consultants, Andy Wood, said the figures are a cause for concern, especially as it suggests firms lack knowledge of the various complex tax codes.
'It's not just the increasing frequency with which the HMRC is named as either one of many creditors or, in fact, the principal creditor for the sums owed,' he said.
He added that the level of finance claimed by HMRC has climbed by nearly 50% in the last year, while smaller businesses can struggle as they lack the necessary finances to cover their debts.
HMRC was owed around £830 million in the last financial year, a jump of 47% from 2015/2016, while a spokesman said the latest figures result from a range of different factors.
Those with concerns or difficulties may wish to consider HMRC Time to Pay services, as support is available for dealing with winding up petitions, unfair penalties and even the threat of bailiffs.
According to HMRC, more than 1.5 million time to pay arrangements currently exist to support British businesses.
The key for any firm facing tough times is to not ignore the problem - more support options should be available provided action is taken early.
By Phil Smith