Tax deferral scheme receives legal approval despite insolvency concerns

HMRC building

HMRC has been given the green light by lawyers to continue its tax deferral
scheme for businesses struggling to pay, despite concerns that it encourages
companies to continue trading while insolvent.

Doubts over the scheme have been raised by insolvency practitioners, who
indicated it may be putting other businesses at risk. Some have even demanded
that HMRC publishes a list of those companies using the scheme so that suppliers
can make up their own mind over whether to continue trading with them, reports

However, HMRC said that it assesses and monitors the risks involved in
agreeing time for businesses ‘that are not viable and will later fail’. It added
that it has tested the legal framework and is satisfied that the scheme is being
‘appropriately managed’.

‘HMRC is always ready to enter into realistic arrangements to give a business
time to pay the tax it owes,’ said an HMRC spokesman.

‘But there will be instances when a business is no longer viable and, in
those cases, HMRC has a duty to take the appropriate action to recover as much
of the debt owing to it as it can. These actions are always a last resort.’

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in tax payments deferred by HMRC

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