Amount of winding up petitions increases by 13%

The number of winding up petitions issued by HMRC has risen by 13% in the last year to close businesses so HMRC can settle unpaid tax bills, highlighting small and medium sized businesses (SMEs) cashflow problems

In 2015, 3,484 winding up petitions were filed by HMRC which is up 13% from the 3,074 applications filed the previous year.

Winding up petitions force businesses to close so their assets can be liquidated to cover the unpaid tax bills that are owed to HMRC.

The rise in the number of petitions filed shows the difficulties businesses, in particular SMEs, have in managing cashflow so that they are able to pay their tax bills on time throughout the year, including corporation tax and VAT.

Funding Options, the online business finance supermarket, says SMEs that cannot afford to pay tax should look to alternative finance to pay tax bills and even out cashflow before they come onto HMRC’s radar.

Conrad Ford, CEO of www.fundingoptions.com said: ‘It’s been well documented that banks have had to scale back their lending to small businesses and assume less risk over the last few years.

‘Small businesses should explore all the opportunities that alternative finance has to offer; peer-to-peer lending, crowdfunding, asset finance and invoice finance are some of the many options available to SMEs looking for funding.

‘The increasing numbers of petitions filed is evidence that growing numbers of small businesses are unable to resolve their issue with HMRC. Therefore HMRC has to eventually take this drastic step in order to prevent arrears building up.

‘By planning in advance SMEs can find ways to manage their cash flow more effectively in order to spread the cost of tax bills and other financial burdens whilst still investing in growth.’

Amy Austin |Reporter, Accountancy Daily [2016-2019]

Amy Austin was reporter, Accountancy Daily and Accountancy magazine, published by ...

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