HMRC clamps down on unpaid tax bills by using 'distraint' powers

HM Revenue and Customs (HMRC) used measures that allow it to visit a struggling firm to collect unpaid taxes without warning twice as many times in the year to April than it did in the 12 months prior.

Indeed, figures published by Syscap this month show that the department used powers of "distraint" almost 11,000 times in the 12-month period compared to 5,520 times in the year ending April 2011.

This suggests the taxman is clamping down on unpaid tax bills, while Syscap said that it means HMRC is recouping other outstanding payments, such as Corporation Tax.

Philip White, Chief Executive of Syscap, said: "If a business's assets are seized and it can no longer fulfil customer orders, then that could easily and quickly spell disaster.

"HMRC is unlikely to be able to auction off the assets at anything like their real value to the business, and the proceeds of the sale may not even cover the outstanding tax bill. In those circumstances the business would still face court action to recover the balance."

Under powers of "distraint", a firm has five days to pay any unpaid taxes after HMRC visits after which point major assets can be seized.

Posted by Thomas Fletcher

Last updated: 20th March 2024