TaxCorporate TaxHMRC asset seizures double over unpaid VAT

HMRC asset seizures double over unpaid VAT

Asset seizures made by HMRC rise 98%, while criminal prosecutions of individuals is up 53% year-on-year to 31 March 2012

HMRC asset seizures double over unpaid VAT

THE NUMBER OF ASSET SEIZURES made by HM Revenue & Customs over unpaid VAT doubled inside a year, according to data obtained by independent finance provider Syscap.

Some 4,746 seizures were made in the year to 31 March 2012, up from 2,401 the previous year – equivalent to a 98% rise.

The problem is exacerbated by the highest-ever UK VAT rate of 20%, according to Syscap chief exectutive Philip White.

“Small businesses need to be aware that HMRC is becoming more and more aggressive in claiming the VAT payments it is due from businesses,” he said.

He added: “As VAT bills are payable on invoiced work rather than receipts, many businesses will find themselves paying tax on work they haven’t yet received payment for. These businesses are likely to have invested money up front in fulfilling contracts, putting further strain on available cash.

“While this pressure on cashflow might have been a nuisance prior to the credit crunch, problems with a big VAT bill could now be a serious threat to the future of a business.”

It was also revealed the number of individuals against whom HMRC has launched criminal prosecution over tax fraud has risen 53% over the same period.

According to information obtained by law firm Pinsent Masons, 157 prosecutions were launched in 2011, jumping to 240 the following year.

Alongside that rise, the number of arrests went up 7%, while convictions followed a similar trend, up 4%.

Pinsent Masons head of tax Jason Collins said: “HMRC has adopted a very aggressive stance towards investigating individuals suspected of tax fraud. It is much more willing to opt for the criminal – as opposed to civil – investigative weapons in its arsenal.”

A spokesman of HMRC said: “The government has given HMRC almost £1bn to tackle tax evasion, fraud and avoidance. HMRC is using this money to increase staffing in key teams, deliver an additional £20bn and increase criminal prosecutions for tax fraud fivefold by the end of the 2015.

“The vast majority of taxpayers are honest and pay what they have to under the law, so it is only right that we tackle the small minority of cheats who deprive the country of vital revenues.”

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