Tax bill crackdown puts firms at risk

A CRACKDOWN on businesses by HM Revenue & Customs over payment of tax bills has accelerated since the general election, risking more company failures.

This is despite criticism of HMRC policy by the now Scottish Secretary, Danny Alexander. In his role as MP for Inverness, Nairn, Badenoch and Strathspey, Alexander said there "must be thousands of people in Scotland who are out of work right now because of HMRC policies" when it was revealed in Scotland on Sunday last month that HMRC had won court orders to shut down 466 companies north of the Border in 2008 and 2009 after they failed to pay their tax bills on time.

Senior accountants have warned HMRC has continued to issue automatic notices threatening "distraint" – when HMRC seizes assets and sells them to pay bills – putting business owners and jobs at risk.

Neil Whyte, a tax partner at PKF, said he had seen an increase in recent weeks in the number of clients previously given time to make payments receiving aggressive letters from the tax office.

He said: "Some of these people and businesses are in a position of needing bank finance. So this is probably the start of something that may result in more personal insolvencies and in more businesses failing. Last year they were negotiating and paying off debts, this year they are not being given that chance because debt recovery proceedings are being pushed through."

Previously HMRC was praised by the business community for its "time to pay" scheme, which allowed struggling businesses to spread their tax payments in the recession.

Neil Mitchell, a tax partner at Baker Tilly, added: "HMRC has certainly tightened up in the past month and deferrals that were previously going through on the nod can now require a great deal more information. We've heard of a number of examples where requests have been turned down."

An FSB Scotland spokesman said about 13 per cent of its members had used time to pay and highlighted the need for the scheme to continue until bank lending improved.

A spokesman for HMRC said there have been no changes to the criteria for agreeing time to pay through the Business Payment Support Service.

He added: "It is not our policy to send distraint warning letters to taxpayers who already have a time to pay agreement in place. But if this has happened we will be very happy to apologise and put things straight."

High-profile casualties of the taxman's clampdown before the election include Highland Airways and Skye-based technology company Gaeltec.