British businesses have racked up £42.6 million in outstanding debt over the last year, forcing HMRC to seize 1,592 assets as a last-ditch effort to settle accounts.
According to Funding Options, this move, called ‘taking control of goods’, allows HMRC to seize assets in lieu of overdue tax bills, which are then sold at an auction to recover money owed to the Government.
While this can prove to be harrowing for businesses, the practice is rarely beneficial for HMRC. Usually it does little to pay back what is owed, as the seized goods often achieve a far lower price than expected leaving businesses with fewer assets and still indebted to the Revenue.
According to Funding Options CEO, Conrad Ford, the increase in incidents over the past year may suggest that HMRC is using increasingly aggressive methods to recover overdue tax.
“Businesses must ensure they have sufficient funding in place to pay tax bills on time, without taking up capital from other aspects of the business,” he explained.
“Small businesses in particular will also need capital in order to invest in and grow their business so its vital there is also cash left over for this purpose, after the important bills have been paid.”
When the bailiff comes knocking
It is important to understand your rights when served with an Enforcement Notice by HMRC Enforcement Officers. Once the notice has been served, you have a choice of paying the debt in full, or negotiating a Time to Pay arrangement.
Businesses are given seven days following a visit from a Bailiff to pay their overdue tax before their assets are seized.
Ignoring the notice, or taking too long to act will result in HMRC Enforcement Officers or bailiffs arriving at your premises to recover goods to the value of the debt under a Controlled Goods Agreement.
It is important at this stage to consult a qualified insolvency solicitor to fully understand how to proceed.