HMRC looked to close down 4, 160 businesses throughout 2018, largely due to them having fallen behind on their tax payments. With some arguing that given the current business climate as well as Brexit uncertainty, HMRC’s approach is too aggressive; especially towards smaller businesses who often struggle to collect payments from their clients in time to make their tax contributions.
Whilst they have eased back from the 4, 700 businesses they tried to shut down the year before, the number is still at a high level. One way that could be utilised to help businesses is the “Time to Pay” scheme, a method that was popular when helping to guide SMEs through the last recession.
As previously mentioned, one of the key reasons why some businesses are not able to immediately meet their tax payments on time is due to late incoming payments from their larger clients. Many tax bills are billed on the money invoiced rather than the overall money received.
HMRC will close a business if they believe this is the best possible way to get the money they are owed. And so, we advise that business owners have an action play ready should they find themselves at risk of closure.