Since the loss of its ‘preferred credit status’ in 2003, HMRC is said to have ‘ramped up’ distraint visits.

Accounting Web reports that the number of occasions its powers have been used to seize assets has quadrupled in just two years, rising to 7,004 in the twelve months to April 2011 from 1,675 cases two years ago. The assets are typically sold off at ‘fire sale’ prices that fail to cover the amount of unpaid tax and reduce the chances of other creditors being repaid.

Stuart McNeill, from law firm McGrigors, believes that: “By barging in and selling the assets of a late paying company without making a proper commercial assessment of the firm’s medium term viability, HMRC risk sacrificing full payment in a few months’ time for far less cash up front.”

Seizing the assets of businesses that might otherwise recover is driving many to insolvency and directly contradicts HMRC’s ‘Time To Pay’ scheme, which aims to support small businesses through the negotiation of late payments.

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Banks who now prematurely push the administration button should be made to ‘pause for thought’

Cllr John Clancy writes:

“It has been a nauseating feature of the last few years that the banks who went belly up themselves are less than sympathetic when it comes to others simply hovering around insolvency.

“The rights and entitlements of being first secured creditor means that the bailed-out banks in particular, who are desperate to build up their pretend capital bases, are more likely to push the liquidate or administration button in order quickly to get out of a business, crystallising a debt asset as much as possible short-term, regardless of the wider commercial or employee consequences.

If they realised it wasn’t that easy, and that others might be paid out before them, then perhaps an appropriate pause for thought by the bank might be a good thing for the entire system.

Yesterday the BBC website reported that, in a leaked letter to David Cameron and Nick Clegg, Vince Cable proposes that RBS should be turned into a new “British business bank” – but the measures proposed by John Clancy would be far more beneficial to the country’s SMEs, averting or better ordering many business insolvencies which “radiate catastrophically outwards into the commercial and social community”.

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