Taxman cracks down on unpaid business rates

HMRC asked courts to liquidate more businesses in the 12 months to September than at any point over the last four years, according to new data.

The taxman filed 4,308 winding-up petitions against British businesses, a 6% rise on last year.

A winding-up petition can be filed by the taxman if companies owe overdue bills of over £750. Other businesses that are owed cash can also file a petition, but HMRC is usually responsible for a majority of the petitions.

It is an application for the court to liquidate the business and start paying off creditors.

“Receiving notice that HMRC intends to wind up your business must come as a real shock to many of these businesses and would put them under intense pressure,” said Lucienne Parry, a partner at accountancy Moore, which compiled the data.

She added: “Once a winding-up order has been made by the court, there is little that can be done by the business to prevent liquidation, unless you can pay the tax bill. Banks also tend to freeze the company’s bank account during this process, putting a stop to all trading.”

HMRC extends a Time To Pay scheme to businesses and individuals who have missed their tax deadline. The plan gives them the opportunity to pay off debt over months or years.

A spokesman for HMRC said: “We only initiate winding-up action as a last resort, where we believe this is the best way to protect both the interests of other taxpayers and creditors.

“Anyone who anticipates payment problems should call us as early as possible as we have an excellent track record for supporting those with genuine problems. We will always work with taxpayers to find the best possible solution, based on their specific financial circumstances – such as spreading tax payments over time through a Time To Pay arrangement.”