Three quarters of businesses cite tax bills as main insolvency factor
An increasing number of companies have cited HMRC debts as main reason for going insolvent, according to figures
TAX BILLS ARE becoming the “biggest killer” of small and medium sized businesses, figures from a leading insolvency firm have shown.
Three of every four insolvencies cite HM Revenue & Customs as the single largest creditor, according to SFP. This could rise as companies who took advantage of the Time to Pay initiative have failed to provision for future tax liabilities.
“Time To Pay is the ticking time bomb that no-one wants to mention,” said Simon Plant, partner at SFP.
“But with HMRC now quite literally ‘calling in their debts’, those that have failed to accrue for those debts or naively believe they will be given more time are in for a rude awakening.”
There is an increasing trend of companies owing from between £125,000 to £500,000, he added.
The firm cited the examples of TWC Joinery & Shopfitting, a £6.5m turnover business that failed with the loss of 40 jobs and a tax debt of £400,000; and Antrac, a £2m turnover waste management business that failed, resulting in the loss of 30 jobs and HMRC debts of £200,000.
Figures released last week by the taxman showed the number of organisations refused TTP arrangements has increased from last year. HMRC attributed this rise to the number of businesses applying for repeat TTP arrangements.