As many UK businesses continue to struggle under the strain of long-standing coronavirus restrictions, HMRC has thrown out something of a lifeline…
Instead of pursuing unpaid taxes, which would undoubtedly result in a wave of insolvencies, HMRC has vowed to ‘go easy’ on businesses (at least for now) in the hope of allowing them the space and time to get their affairs in order, and hopefully, to bounce back.
Business Secretary Kwasi Kwarteng said that HMRC would…
“…take a cautious approach to enforcement of debt owed to government that will have accrued.”
This is despite the fact that HMRC was last year granted ‘preferential creditor status’ in insolvencies for outstanding VAT and income tax, which would theoretically mean that they are front of the queue to receive their money back from debtors.
The money will need to be paid back, of course, but it seems that HMRC are looking at the bigger picture.
That bigger picture includes the VAT deferral payment scheme, which has allowed companies who sign up, the opportunity to break down their VAT payments into eight monthly instalments.
‘Working constructively with customers’ is what HMRC calls it, but they hasten to add that they will still take action should a company not engage with them, or fail to respond to their requests for information.
This should be welcome news for plenty of businesses up and down the UK, who had no doubt been fearing a letter from HMRC regarding unpaid tax.
All the government loans, schemes and various different packages of support that have been offered to businesses, this last 18 months, will eventually need to be paid back, of that you can be sure…
…but for now, it seems that HMRC are adopting a patient and understanding approach, in the interest of protecting livelihoods and keeping people in work.
For many of our clients, the time for patience and understanding has come to an end, and they now need to get their money back to ensure their own long term viability.
Perhaps this temporary breathing space from HMRC will allow debtors to pay money back elsewhere, but that remains to be seen.