Society, of course, needs to recover tax income in order to survive and function in a civilised fashion. As very large numbers of individuals and businesses may be unlikely to voluntarily offer up taxes, somebody needs to undertake the unenviable job of ensuring that they do eventually pay up.
It's a thankless role and not too many people would willingly swap places with the employees of HMRC as they go about their business.
Perhaps too much enjoyment is being shown
However, for a long time the old Inland Revenue and more recently the newly-badged HMRC which has replaced it, has been accused of being rather too enthusiastically zealous in their pursuit of small companies and the self-employed.
At the same time as the news is often full of HMRC apparently doing casual deals over lunch involving the marking-down of some major corporate enterprise tax debts by billions, there comes story after story of individual small business people being mercilessly pursued by the full force of the state to the very ends of the earth over relatively small amounts of money.
Whilst concerns over these apparent disparities of outlook and approach have long been bubbling, they have recently reached new heights following certain announcements relating to HMRC statistics.
The increasing use of Distraint
HMRC and its predecessors have long been unique in that have a far greater legal right of entry, investigation and asset seizure, than do the police. HMRC typically don’t have to distress themselves with the doubtless tedious business of getting a court order to do so.
In the past, these powers to enter a property unannounced and remove assets in lieu of tax payments have been used on what might be described as a relatively restrained basis.
However, the latest statistics indicate that the instances where they did exercise these powers more than doubled between 2010 and 2012*. This process is legally referred to as Distraint and some suspect that it appears to show all the signs of going from an action of last resort to one that is adopted with eager relish.
Who is this being applied to?
If at this stage you suspect that this always involves muscular HMRC officers breaking down fortified doors on backstreet warehouses where all sorts of illicit activities are underway, well, you would be mistaken.
In significant numbers of cases this involves people such as accountants and solicitors suddenly finding people walking into their premises unannounced and immediately starting to remove office equipment and furniture due to unpaid taxes.
Why is this happening?
Traditionally, the taxation authorities recognised that occasionally businesses may be unable to pay their tax by the specified last day due to exceptional reasons such as a short-term cash flow problem or similar.
Previously, obtaining help in terms of time-to-pay understanding from HMRC was relatively easy but today that scheme has been all but discontinued.
The exact reasons for this are far from clear but many will suspect it is linked to the government's determination to increase their cash flow and also recover more tax revenues as part of the overall national debt reduction programme.
What this might mean for you
January 31 is the traditional milestone for self-assessment small business taxation payments and based upon the above statistics, significant numbers of businesses might need to anticipate HMRC ‘heavies’ arriving on their premises to remove equipment over the following weeks and months.
The bottom line is simple - you are not going to win an argument with HMRC.
In the short term, you might be sensible to do whatever it takes to pay your tax bill on time. Schemes do exist to help small businesses fund their tax debt in line with tax deadline cut offs.
If you’re currently wondering just how you are going to meet your tax debts, it might be prudent to find out about such schemes - unless you enjoy the thought of seeing your assets go sailing past you out of the door.
If you are concerned that you are not paying the correct amount of tax, then please get in touch. We can help you develop a tax strategy that ensures you remain compliant and fulfil all your tax obligations, and don’t fall foul of the existing, and proposed, legislation.