Phil MeekinView Profile
Sheffield based insolvency and business turnaround specialist warns of potential raft of businesses forced into cash-flow difficulties as HMRC swoops to recover funds from tax avoidance schemes.
Many of the schemes, which appear to offer a legitimate means of reducing tax liabilities, have since been disputed. Those which are under review are now subject to accelerated payment to HMRC of disputed funds, until the case is resolved.
According to Wilson Field, as of July 2014, businesses caught in a disputed case are served an Accelerated Payment Notification (APN). This requires full payment of the taxable value up front, potentially causing a swathe of companies to reach breaking point as cash-flow becomes problematic.
Phil Meekin, head of marketing at Wilson Field, said; “Many individuals and business owners took professional financial guidance in the belief that they were legitimately keeping their tax liabilities as low as legally possible through these schemes, but that will not stop the damage caused by a hefty tax bill which is repayable on receipt of an APN.
“The size of these bills is likely to push many business owners to breaking point if they do not work quickly to ameliorate their cash-flow and remain in a position to keep on trading.
“It’s important that everybody should pay their tax, but it’s difficult not to have a degree of sympathy for those who acted in good faith and have now received an APN. Tens of thousands of APNs have been issued since July, demanding repayment of unpaid tax within 90 days.
“As this comes to a head, we could be witnessing significant numbers of businesses starting to fail across the UK.”
Wilson Field also indicates struggling businesses have a tendency to build up tax arrears in areas like VAT, PAYE or Corporation Tax.
Phil added; “In most cases this isn’t a deliberate plot to rob the Treasury but when cash is tight, those pressing creditors which are crucial to the very existence of the business tend to jump to the front of the queue.
“Essential suppliers, utilities, staff wages, rent, etc, usually take precedence in the eyes of business owners over unpaid tax, but sooner or later, HMRC will want its share and it’s crucial that businesses prepare for this and take advice.”
Wilson Field provides short and long term financial advice and strategy. Our team of experienced advisers work across regional offices to help UK businesses survive.