The number of petitions being issued by HM Revenue & Customs (HMRC) to wind-up firms has fallen dramatically in the past year, taking the practice to the lowest level of usage in five years.
Figures obtained through a freedom of information request revealed that only 3,733 petitions for winding up companies were issued by the department in the 2012-13 tax year, a drop of 42 per cent from the 6,449 issued the year before.
In addition, the number of company winding up orders successfully obtained has fallen by 25 per cent in the past year, falling from 3,399 to 2, 541. The biggest decreases were in Scotland, at 68 per cent, but England and Wales saw filed petitions drop by 37 per cent and winding-up orders by 20 per cent.
However, there has been a corresponding rise of distraint by HMRC, with the department setting a new high of 1,488 asset seizures over the last year or so from self-assessed taxpayers who could not pay their bills.
According to recent data, the majority of those who had goods seized were self-employed professionals, and in the 2011-12 tax year, 1,376 cases of distraint were recorded compared with only 730 in 2010-2011.
Under their powers of distraint, HMRC can visit premises without warning to collect unpaid taxes and, if they are not paid in five days, can sell business assets.
It looks as though the department is becoming more aggressive in its attitude to the collection of tax and with its powers of distraint, means that the department can effectively jump to the head of the queue if a firm is struggling to pay, so with the self-assessment tax filing deadline looming, businesses need to be able to find funding, as the department appears to be less amenable to giving firms extra time to pay.
