HMRC are shutting down more businesses in the pursuit of unpaid taxes.


It is reported that HMRC applied to shut down 12% more businesses in 2016 than they did in 2015, as they stepped up their tactics pursuing unpaid taxes.

Winding-up applications rose 12%, up to 3,906 in 2016 from 3,485 in 2015.  HMRC is liquidating the assets of more and more businesses forcing them into closure. HMRC is clearly stepping up its efforts to collect unpaid tax. On top of closing businesses and liquidating the assets of businesses with unpaid tax bills , HMRC is also levying large penalties on businesses who pay their tax late when struggling with their cash flow.

With the increased cost of imports, rising inflation, the upward pressure on wages and the exponential growth of business rates, the demands on the cash flow of SME’s are extreme.

The Credit Protection Association expects that the rise in the use of winding-up petitions indicates that SME’s in the UK will continue to face a struggle with cash flow even though the Country’s economy remains strong. This is going to be especially true around major tax deadlines such as due dates for VAT or corporation tax.

As SME’s continue to struggle to access funding from banks and other financial institutions (who under pressure from the regulators to improve their own balance sheets), so they need to find solutions within their own business to cover the troughs in cash flow.

For many SME’s that simply means holding back payment to their suppliers. This can create a domino effect as cash flow problems are passed onto otherwise healthy businesses. It is at times like these that suppliers need to be vigilant in enforcing their payment terms and getting their customers to pay on time.  This is best done by involving a third party specialist such as CPA. When the late paying customer receives a communication from The Credit Protection Association, payment of your outstanding bill suddenly becomes a priority over that of other suppliers.

Likewise, if you are facing a large tax bill and are looking to find the cash to pay it, rather than holding off payment to important suppliers, thus hampering future supply, why not look elsewhere on your balance sheet?  Rather than focus on your creditors, do you have a large entry for debtors in your current assets? Your tax bill could be funded if you were able to collect payment from  your late payers and turn those debtor assets into cash assets.

The Credit Protection Association passionately believes that businesses should be paid on time. CPA can help turn those over-dues into cash and help your cash flow.

Why not contact us and see how you could benefit.

James Salmon, Director, 28/3/2017