HMRC steps up asset seizures to pay VAT bills

THE NUMBER of businesses who have had assets seized and sold by HM Revenue & Customs to settle overdue VAT bills has soared during the recession, according to data obtained by finance provider Syscap.

Figures sourced from HMRC show that 3,657 businesses had assets seized last year after being served distraint orders by the taxman, compared to just 263 businesses in 2008-09.

In total, HMRC raised £95.2m in the year to 31 March 2013 by seizing business possessions such as vans, machinery or IT equipment, which are then sold off at public auction in order to settle unpaid tax bills.

“The fact that there has been such a significant increase in the use of HMRC’s powers to seize-and-sell assets to recover VAT during the recession will be a huge concern to SMEs who have been struggling to cope during the downturn,” chief executive Philip White said.

The actual value of the assets sold is likely to dwarf the £95m raised by HMRC, White added, because assets are often sold at knock-down prices to achieve a quick sale.

“HMRC is only concerned with recovering the tax it is owed, not achieving the best price,” he said.

White also raised concerns that the rise in repossessions cancelled out the benefits of the Time to Pay scheme, under which HMRC granted short extensions to tax deadlines.

“HMRC has adopted a far harder-line approach under increasing pressure from the Treasury to ensure it takes as much tax as it can to help fill in the hole in the public finances.”

“We are seeing more and more businesses looking for alternative ways to bridge critical funding gaps before they appear. They know when the deadlines are and they want to plan for them, they just need the right funding solution in place to smooth out the peaks and troughs in cashflow,” White said.

via HMRC steps up asset seizures to pay VAT bills | City A.M..

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