Tax man increaingly drawing ‘line in sand’ over non-payment of PAYE and VAT, experts warn
HMRC is increasing the number of winding-up petitions it is issuing across England and Wales, the latest update from the Insolvency Service has said.
There were 221 compulsory liquidations last month, 45% higher than in August 2022.
In a note accompanying the figures, the Insolvency Service said: “Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus pandemic, partly as a result of an increase in winding-up petitions presented by HMRC.”
Glyn Mummery, a partner in the restructuring team at FRP Advisory, whose recent cases include the collapses of Henry Construction and Nottingham firm J Tomlinson, said: “HMRC are being more aggressive. They don’t want people to not pay tax and think they can get away with it.”
He added: “If you look at the pandemic, they took the gloves off and put the mitts on. They were very generous to companies. But if firms are not paying PAYE or VAT, they have to draw a line in the sand. They have to be seen to be collecting it, or doing something about it, otherwise it increases the chances of people not paying.”
Mummery said HMRC was increasing the amount of so-called ‘stop’ notices to cut down on tax avoidance schemes and was also increasingly asking for security bonds – a tax deposit requested by the tax man to settle any tax liabilities that may arise in the future if firms are deemed to be at risk of entering financial difficulty.
The number of company insolvencies across all sectors in August totalled 2,308, which was 19% higher than in August 2022. And there were 195 administrations, a 68% rise on the same month last year.