12 per cent rise in winding-up applications to recover unpaid tax

A new study suggests that the number of winding-up applications issued by HM Revenue & Customs (HMRC) to small and medium-sized enterprises (SMEs) is on the rise.

According to business financier Funding Options, 3,906 such applications were issued to SMEs in 2016 in a bid to recover unpaid tax, up from 3,405 one year previous and representative of a 12 per cent rise.

Their research found that HMRC successfully obtained 2,065 winding-up orders in total, up from just 1,944 in 2015.

Mr Conrad Ford, CEO of Funding Options, said that the study illustrated exactly how far the tax authority is willing to go in order to recover unpaid tax.

He said: “Shutting a company down is the biggest weapon in HMRC’s arsenal, but it’s one the taxman is using more and more.

“In these extreme circumstances, companies may have some difficult choices to make between paying employees or suppliers and paying their tax bill.

He added: “It’s vital that businesses don’t stick their heads in the sand: SMEs need to try to work with HMRC to prevent arrears backing up. They should also take pro-active steps to make sure they have a funding safety net readily available for when they need it”.