The level of debt due to HMRC continues to grow as deferral and loans continue plus fraud committed in connection with Covid loans.
The deadline for joining the time to pay scheme is approaching where businesses need to register to make extended payment under the scheme which lots of businesses will need to allow them to survive until trade gets back to normal or a new normal.
To help reduce the potential loss to HMRC, the last budget provided for an additional £100m to fund and extra 1200 tax officials and it is expected that HMRC will take a tougher stance as it needs to make significant recoveries from the estimated £65bn of HMRC debt created by Covid issues.
At the moment, HMRC can’t take bankruptcy or winding up action due to the moratorium on petitions scheduled to end 31 March. This has led to the reduction in insolvencies during 2020.
Once collection action commences, it would be expected that HMRC will target cases and quickly make applications to court if it is felt that fraud was involved or that the business is unlikely to be able to make ongoing payments in a reasonable timeframe.
This will be followed by the start of repayments of the various interruption or bounce back loans made to businesses during the pandemic
Its not envisaged that they will want to be involved in ongoing deals to repay past 12 months or in monitoring those deals on an ongoing basis which use their limited resources.
Using the bankruptcy or winding up system is quick and easy for HMRC and removes problems for them where the new preferential creditor status will help them get a return and pass fraud investigation work to the appointed insolvency practitioner.
This will significantly impact businesses that have struggled during the pandemic either through limited trading or total shutdown.
If you think your business will struggle with repayments, we can help you
Contact us HERE or call Neil or Ken on 01476 574149