THERE was a 13% increase in the number of winding up petitions filed by HMRC in the last year in order to close businesses and meet unpaid tax bills, says Funding Options, the online business finance supermarket.
HMRC filed 3,484 winding up petitions in 2015, up from the 3,074 applications filed the previous year, as HMRC forced businesses to close in order and liquidate their assets in order to cover the unpaid tax bills.
The sharp jump in the number of winding up petitions filed by HMRC highlights the difficulties businesses, and in particular SMEs, can have in managing their cashflow to pay their key tax bills throughout the year, such as partnership tax, corporation tax and VAT bills.
SMEs can often have a more volatile cashflow than larger business. For example, VAT is billed on amounts invoiced rather than amounts received which can present a problem for small businesses when a key invoice is not paid on time and the tax bill is due.
Small businesses can also be more reliant on seasonal trade which can mean fluctuations in their cashflow throughout the year.
Conrad Ford, CEO of Funding Options said: “Failing to pay tax can lead to disastrous consequences, but the business may not necessarily be at fault.
“Because of economic headwinds caused by Brexit we may well see increasing numbers of winding up petitions in the next few years.”
The ATT had previously expressed concern that the legislation was overly complex and created unnecessary complications within the practical working of the new allowances
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
UK government should support mid-sized businesses to create a ‘new economy’ post-Brexit, says BDO report
Mid-sized British firms are currently growing faster and generating more profit than their counterparts in Germany, France, Italy and Spain, despite uncertainty surrounding Brexit, says the report
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal