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Small businesses have a tough time of it generally, and apparently the HMRC don’t make it much easier! The tax department applied to close 4,160 businesses in 2018, that had fallen behind in their tax payments. Many think this approach is a little too forceful, and that they could be more accommodating. Perhaps this should be the case especially in view of the current uncertainty regarding Brexit, and the slowing down of economic growth.
HMRC’s hard-line and uncompromising attitude in the face of the tough economic atmosphere is seen as out of order by many organisations who support small businesses. Conrad Ford, CEO of business lenders Funding Options said “While HMRC has eased back from last year, when they tried to shut down 4,700 businesses, it should be looking to give them even more leeway.” He advised that business owners must have an action plan in case they find themselves in this situation.
It is suggested that strategies such as the ‘Time to Pay’ scheme, used to guide SME’s through the last recession could also be implemented. This allowed taxpayers to spread their overdue tax payments over longer time periods. In an ideal world, customers would pay for their goods and services sooner rather than later. This means the business could stay up to date with it’s own bills and payments. If they struggle to meet their tax obligations, HMRC can shut down the business and place it’s assets into liquidation to recover outstanding tax. Slow and late customer payment is one of the main reasons that businesses get into difficulties.
Business owners need to consider their options should cash flow problems arise, and think about how they will manage their finances. HMRC sanctions should be avoided, as they have the power to seize business assets and ban company directors. For help and advice with this and other financial quandaries, call John S Culwick. Many years of experience in the field of accountancy and finance, means sound advice and guidance. Call now on 01268680702