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February 14, 2018
The number of SMEs having their assets seized by HM Revenue & Customs as a result of unpaid VAT has almost doubled in the space of a year, recent research has revealed.
In the year to 31 March 2012 a total of 4,746 seizures were made, compared with 2,401 in the previous year.
Philip White, Chief Executive of Syscap, which conducted the research, warned that HMRC is becoming increasingly aggressive in claiming VAT payments, and that the future of some small businesses could be under threat as a result of large VAT bills.
‘Prior to the credit crunch, banks were offering more credit to SMEs, so businesses could fund their VAT bills through loans or overdrafts. Since then, however, capital adequacy rules have forced banks to rein in their lending, which has made it more difficult for SMEs to rely on bank funding alone’, he said.
‘As VAT bills are payable on invoiced work rather than receipts, many businesses will find themselves paying tax on work they haven’t yet received payment for. These businesses are likely to have invested money up front in fulfilling contracts, putting further strain on available cash.’
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