In 2002 the insolvency regime changed in 2002 under the Enterprise Act, when HMRC had their right as a preferential creditor removed and were ranked alongside unsecured creditors.
Now it is back to the future, as the government plans to give HMRC preferred status in bankruptcies, which would put HMRC back on the same footing as preferred creditors such as banks.
The measure is designed to bring in around £600m, but R3, the insolvency trade body, is quoted by the FT warning it could be “a retrograde and damaging step to UK plc if not thought through carefully.”
It said the measure could amount to “a tax on creditors” who would collect less in an insolvency and this could hit small businesses, pension funds, suppliers and lenders, as well as making borrowing for small businesses harder to come by.
"If not thought through carefully" is the hallmark of the government's approach to tax!
Tax does have to be taxing.
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Are the HMRC law breakers giving poor and/or potentially dishonest advice to Ministers again???
ReplyDeleteFirst we see the so-called 'IR35 tax clampdown'. The gormless, wasters at HMRC have lost 3 out of 4 such cases contested in the last year - they don't understand the legislation themselves.
The extra theoretical revenue it will generate is peanuts and could have an overall detrimental affect on the economic fortunes of the UK with it's anti-business message.
Similarly making HMRC preferential creditors is a retrograde step which will hit small business and do nothing to encourage people to pursue their entrepreneurial spirits.
HMRC have, as usual, fucked up!
HMRC vs Intelligence = DICHOTOMY
ReplyDeleteQuote: "Similarly making HMRC preferential creditors is a retrograde step which will hit small business and do nothing to encourage people to pursue their entrepreneurial spirits."
ReplyDeleteIf small business, as you call it, made proper provision for their tax and NIC outgoings etc etc etc there wouldn't be a problem.
And if they can't pay what's due, I'd suggest they were probably close to, if not already, trading insolvently illegally.
Sorry, no sympathies for anyone unable to "pursue their entrepreneurial spirits" because they haven't paid what's due. Which brings me to another statement I often hear in that context.
Business says to me "Get in the real world, know how we operate" etc. To which I always reply "I am in the real world, one in which everyone pays what's legally due, on time, and in the right amounts".
Being a bit harsh there I think. So a company goes bust and a small supplier gets in line as a creditor but HMRC gets it all as their share so that company goes bust too. How's that the small supplier's fault? Not all debts are self inflicted and not every taxpayer is a bad guys.
DeleteYes the comment is a bit simplistic. If his or her wages went unpaid one month and they couldn't meet their immediate outgoings would they be classed as someone not paying their way. The days of having a comfy wedge of cash to fall back on is a luxury no longer afforded by most small hard working businesses which probably pay the commentors wages
ReplyDelete