The details show a dramatic u-turn on the goverment’s calls for creditor groups, such as banks, to do everything in their power to help companies who are struggling to keep operating.

Figures released by accountancy firm UHY Hacker Young show that in the last six months HM Revnue and Customs (HMRC) were behind 43% of all creditor petitions seeking to wind up companies for debt collection purposes that were lodged.

Nick Hancock, a partner at UHY Hacker Young said “The most important message for businesses is that they cannot fall behind with tax payments and then hope for HMRC’s good will. Despite the government’s sympathetic stance towards businesses during the recession, HMRC’s priority remains to maximise debt recovery,” he said, warning that he expected tax officials to toughen “time to pay” agreements as pressure to restore the public finances mounts after the general election.

“If this is HMRC in ‘soft touch’ mode, businesses will be concerned about Revenue & Customs turning the screw after the election … Company directors who can’t come to a workable agreement with the taxman or who break the terms of an agreement, will find that HMRC will be very quick to push the button on their business.”

HMRC had been offering companies who were struggling “time to pay” agreements if they were provided with an advance warning of likely payment problems by the company in question, but it would seem that these arrangements were a lot harder to come by once the firm had fallen into arrears on payments.

The political tension between recovering tax arrears and offering temporarily stretched businesses some lenience echoes the government’s equivocal guidance to state-supported banks Royal Bank of Scotland and Lloyds Banking Group. They have been under pressure to both rebuild their capital bases while also continuing to lend to struggling small and medium-sized businesses through the recession.

HMRC Leading the Winding Up Race is a post from: Federal Management