Gordon Smith, director of the Revenue’s receivables management service, speaking exclusively to Accountancy Age, urged businesses facing insolvency to approach the tax collector in order to reach a deal.
‘We’ve done that for some very large entities that you would recognise the names of recently,’ he said.
Smith emphasised that the Revenue now has a ‘policy of enterprise and business rescue’. ‘Patricia Hewitt summarised this on the basis that no viable business should go to the wall simply by premature action by the Revenue or Customs & Excise,’ he added.
The change in preferred creditor status means that, from September, the Revenue will no longer be the creditor first in line when businesses go belly up, and could face a loss of tax income as a result.
Neil Hamper, chairman of the taxation and financial affairs committee at the Federation of Small Businesses, is sceptical of the new approach.
‘Most small businesses are scared to death of all bureaucracy, and that includes both the Revenue and Customs. I suspect this is all part of the Revenue losing its preferred creditor status.’
He added that the Revenue is currently ‘swinging into touchy-feely mode’.
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