• Most powerful weapon in HMRC's arsenal

• Highlights hard-line approach with businesses

HMRC has filed 4,147 winding-up petitions in the courts in the last year [1] in a hard-line bid to recover unpaid tax from businesses – an increase of 11% on the previous year when it submitted 3,733 requests, says LDF, a leading finance provider.

LDF says that the jump in the number of petitions filed by HMRC to wind companies up throws a spotlight on the lengths to which it is prepared to go to recover the tax which is owed.

It explains that applying to have a company wound up is the most powerful weapon in HMRC's arsenal against businesses with unpaid tax bills, because if granted it forces a business to be sold and its assets liquidated in order to get back the amount outstanding.

Peter Alderson, Managing Director of LDF says:

"HMRC is still under huge pressure to get all their tax receipts in and wants to be seen to be taking a tough stance against those who don't pay up on time. This jump in winding-up petitions in the last year shows that it is now prepared to go to much greater lengths than previously in order to recover unpaid tax.

"Despite having other heavyweight tools at its disposal, such as the power of distraint which allows it to seize a debtor's assets, HMRC appears to be taking an increasingly aggressive stance."

LDF says that they have seen cases where HMRC have been prepared to give a little lee-way to struggling businesses with short-term difficulties in paying, however it is unlikely to be sympathetic if this goes on for too long.

TAX TAX TAXAdds Peter Alderson, "Even though the recession is now technically over, cash flow is still an issue for many businesses. Smaller companies in particular can be more prone to difficulties in paying tax bills on time – but that doesn't mean that they aren't solvent, successful businesses.

"Smaller businesses are often more vulnerable  to cash flow problems if just a few customers pay late, or if they have a big upfront VAT bill to pay in advance. They also tend to have fewer funding options to cover any short-term shortfall, as bank lending to SMEs in the form of overdrafts and loans remains in relatively short supply."

According to LDF, UK businesses currently owe HMRC £2.6billion in overdue VAT alone, and are finding it increasingly difficult to find bank funding to ensure that they make their tax payments on time.  This is prompting a growing number to turn to finance solutions, helping to smooth out their unpredictable cash flow.  In response to this demand, LDF offers short term loans for businesses' Corporation Tax and VAT liabilities, over terms from 3 to 12 months.

"Planning ahead to find ways of mitigating potential payment problems is key. We are seeing more and more companies looking for solutions by using alternative finance options to even out variations in cash flow," says Alderson.

[1] Year ending March 31st

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