Tax Man Gets Tough on Small Businesses

It has been reported in the Independent that the taxman getting tough on small businesses who are struggling to pay the tax due. This is supported in the article by HM Revenue & Customs’ own figures, (analysed by Wilkins Kennedy, the accountant) which shows that in the year to 6 April 2012, HMRC took 57 per cent more petitions to Court to wind up business with unpaid tax bills than in the previous 12 months.

It is also reported that HMRC’s use of its power to distrain assets (in effect put a charge on them and if the tax is not paid then they can be taken and sold at public auction) has increased dramatically.

Many people will have little sympathy for these individuals (assuming that they have committed tax evasion or have had a tax investigation) but our experience is that in most cases we see there is no evidence of tax evasion and there has not been a tax investigation. Examples we have seen include barristers who have had no tax investigation but are unable to pay tax bills as the Crown has not paid their fees, indeed this has been subject to communication between the Barristers Bar Counsel and the Treasury as how can the Crown expect to be paid if the Crown is not paying the people whom they demand taxes from?

Many of the businesses and individuals, who are pursued for distraint on their assets for tax debts, are suffering from cash flow difficulties, not as a result of tax evasion or tax investigation, but as a result of them not been paid themselves. The banks have squeezed overdrafts of many of these businesses and they have used personal money to try to bridge the gap between when they have to pay staff and their suppliers, and when they get paid themselves.
The third and quite frequent category are again not tax evaders or people subject to tax investigation but people who are in the tax system, but dilatory with their tax affairs. They often ignore letters and reminders and the winding up petition is HMRC’s way of trying to get them to sort out their tax affairs. HMRC could perhaps do this by launching some form of tax investigation but it is a much more cheap and effective route to threaten winding up petitions.

In most occasions, if people take early action they can actually receive a sympathetic approach from HMRC (much more sympathetic than if they had been guilty of tax evasion or being subject to a tax investigation) or if the business is not viable, speak to an Insolvency Practitioner and manage the demise of the business.

Gilbert Tax can help you

For most people, the simple thought of having to deal with an Tax Investigation or disclosing tax evasion is so terrifying that they avoid the issue altogether and often find themselves in even greater tax investigation difficulties with higher bills than they need to. There is no need to let problems large or small with the HMRC escalate to the point where your quality of life and health suffer.

At Gilbert Tax, we have a wealth of experience in finding closure for clients dealing with Inland Revenue tax investigation and significant experience in dealing with tax amnesty, defending enquiries into tax avoidance planning and tax evasion issues.

For a private discussion of your tax matters, please call Gilbert Tax on 0800 734 3333 or email us at: enquiries@gilberttax.co.uk

About Gilbert Tax

Joined the Inland Revenue in 1985 and after two years of training moved into tax investigation work. In 1996 he joined Ernst & Young’s tax investigation team and left them in 2005 to start Gilbert Tax. A member of the Chartered Institute of Taxation and chaired the Leeds branch between 2002 and 2004.
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For a private discussion about how we can resolve your tax investigation and potentially save you money contact us at any time using the detail below. Our initial discussion will be undertaken without charge. Although our main base is in the North of England we have clients all over the country and offices available in Leeds, London and Birmingham. Telephone: 0800 734 3333 | 0113 287 2299 | 0203 328 9442 | Fax: 0113 286 4734
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