By Daniel Hunter
More than 1,000 small and medium-sized enterprises (SMEs) had assets seized by HM Revenue & Customs (HMRC) last year due to late tax bills.
Online finance supermarket, Funding Options, is warning SMEs that they need to have funding in place before the upcoming 31 July tax deadline to avoid suffering the same fate.
Under a power known as ‘distraint’, HMRC staff can raid business premises without warning, and seize goods or assets to cover the value of unpaid tax, penalties and interest payments without a court order.
With the 31 July tax deadline just days away, Funding Options claims that it is not widely recognised that small businesses, as well as filing their self-assessment tax returns by the end of this month, must also make an up-front payment of 50% of their annual tax liability in one lump sum. This can run to hundreds of thousands of pounds for some businesses, making it crucial that funding is in place if that cannot easily be covered by cash flow.
Asset seizure is a now a realistic consequence of failing to pay tax bills on time, with HMRC under pressure to increase its tax receipts.
Conrad Ford, CEO of Funding Options, said: “Businesses need to be aware that HMRC is much less forgiving of payment problems than it was a few years ago, and having funding in place for tax bills is now absolutely vital for businesses that might struggle to cover such a big lump sum through cash flow.
“The July 31 tax deadline can be a major pinch point in SMEs’ cash-flow cycles. It is essential they use the remaining days to get sufficient funding in place.
“Taking control of finances in order to cope with the pressure of tax deadlines is paramount for SMEs that want to remain stable. SMEs need to investigate all the options available for them if traditional lending is difficult for them to secure."