Small businesses may see the taxman turn up unannounced on their doorsteps if they don't settle their outstanding liabilities, as HMRC looks to more frequently use 'powers of distraint' to recover unpaid taxes.
There are already signs that HMRC is clamping down on unpaid business taxes over the last year, with the taxman said to have visited more than 10,000 businesses in the year up to March 2012 to use distraint powers, up from approximately 5,500 businesses in the year ending March 2011, according to Syscap.
Distraint powers allow HMRC to visit the company in tax debt with no notice. If taxes aren't paid inside five days, the tax authorities then can seize any assets without the requirement of a court order.
This power has previously been used to collect unpaid payroll taxes, but has now been expanded to collect a wider range of business taxes.
Commenting on the news, Jim Furey, Corporate Manager for SBF, felt that SMEs could not afford to take business taxes lightly: "Distraint measures often prove disastrous for small businesses, as, once assets are seized, the company in question will face a big struggle to fullfil customer orders.
"Seized assets are unlikely to be auctioned off for anywhere near their real value, which normally leaves the company facing heavy losses and major cashflow issues."
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