Heavy-handed HMRC targeting SMBs

Latest Syscap figures reveal government is becoming less lenient when recovering unpaid VAT

SMBs are at more risk of having their assets seized by HM Revenue and Customs (HMRC) if they fail to pay their VAT on time, Syscap has claimed.

The finance specialist believes HMRC is becoming increasingly heavy handed when recovering VAT bills, using its powers of "distraint" 2,401 times in 2011, compared with 921 times the previous year.

Philip White, chief executive of Syscap, said: “Small businesses must be aware that HMRC is taking a much more proactive stance at recovering unpaid VAT and suggests they make contingency plans if they are struggling to make payments.”

“HMRC is also less prepared than it was a year ago to allow businesses to defer tax payments under its Time to Pay scheme, so businesses really do need to get their payments in order or they could be at real risk of having their assets repossessed.

“HMRC had previously reserved its use of distraint to recover unpaid payroll tax. However, since the recession it has been far more active in recovering other types of unpaid tax, most notably VAT,” White warned. “We are frequently approached with funding requests for VAT bills, by well-established small businesses that are experiencing some short-term cashflow problems.”

However HMRC hit back at the claims, saying it will endeavour to 'exhaust' other avenues first.

In a statement sent to CRN, it said: "HMRC purely uses its powers to seize assets of businesses who owe us tax when all other avenues have been entirely exhausted. Only a very small number of businesses who have long term outstanding tax debts are collected in this way.

"The vast majority pay in full and on time, so it is only fair that for those businesses who choose not to pay that we take appropriate action to collect any tax owed. We support businesses in genuine difficulty through allowing time to pay while taking firm but proportionate action against those who don’t pay."