Record number of self-employed hit by HMRC asset seizures
HM Revenue & Customs last year seized assets from a record 1,488 self-assessed taxpayers – the bulk of whom were self-employed – and may go even further after the Jan 31st deadline.
Issuing the alert, finance provider Syscap said this month’s tax bill cut-off date could trigger another wave of ‘distraint’ action against independent professionals who fail to pay what they owe.
In light of the warning, inspired by such HMRC action of seizing assets - such as IT kit - to collect unpaid tax peaking in 2012-13, CUK has today published a guide for contractors facing the deadline.
At present, the taxman’s seizures are up 8 per cent on the 1,376 cases in 2011-12, and have more than doubled since the 2010-11 tax year, when just 730 self-assessors were subject to HMRC’s distraint power.
The power entitles tax officials to remove and sell business assets, such as computers, without a court order where the tax bill, usually including interest and penalties, is not paid within five days of the deadline.
Worryingly for small traders, whose ability to do business can potentially be destroyed if key equipment is seized, the Jan 31 deadline is not the only tax bill facing them in the coming weeks.
In fact, VAT bills for the fourth quarter of 2013 are due to be paid by Feb 7th, meaning HMRC has two opportunities to further ramp up its use of distraint, which it once reserved to recover payroll taxes.
Syscap’s Philip White reflected: “Small businesses facing cashflow problems as the[se]…tax deadlines loom need to take immediate steps to secure funding. HMRC is more likely than ever to take a draconian approach to tax debts.”