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HMRC seizing more assets to settle VAT bills

There has been a significant rise in the number of companies having their assets seized before being sold off by HMRC due to unpaid VAT bills. As a result, businesses all over the UK need to ensure that their accountant, from the Wirral to Worcester, is making an accurate calculation of monies owed to HMRC in order to avoid such action.

Data provided by lender Syscap shows that the number of incidents of seizures has multiplied by 14 from 2008 to 2013, with firms having assets seized through HMRC’s powers of ‘distraint’.

Distraint essentially gives the taxman the ability to take goods and assets – which may include IT equipment, machinery and vehicles – from premises and then sell those at a public auction to settle tax bills.

This method made £92 million for VAT in 2013, although Syscap believes that, in reality, the sales value from assets will likely be much larger, due to the fact that valuable assets – including equipment or stock – are regularly sold at far cheaper prices for speed of sale.

The chief executive of Syscap, Philip White, explained:

“The fact that there has been such a significant increase in the use of HMRC’s powers to seize-and-sell assets to recover VAT during the recession will be a huge concern to SMEs who have been struggling to cope during the downturn.”

He went on to say that, when assets and goods are taken and then sold at quick prices, it costs the company a lot more than the VAT bill it failed to pay, and that HMRC is merely looking to recover the monies owed rather than securing as much as possible.

Posted by Louise
March 21, 2014

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