The biggest SME killer - tax - Business Works
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The biggest SME killer - tax

taxes
M assive debts owed to the taxman are the likeliest cause of future company failures. Recent examples include:

  • TWC Joinery & Shopfitting – a £6.5 million turnover business that failed with the loss of 40 jobs and an HMRC debt of £400,000
  • Antrac – a £2 million turnover waste management business failing with the loss of 30 jobs and HMRC debts of £200,000
  • Darby Glass – a £4 million turnover glass processor employing 60 staff business that entered into administration owing HMRC £420,000
  • Protech Integrated Services – a security firm owing £450,000 to HMRC that was successfully sold saving 60 jobs.

"Nearly three out of every four instructions currently received cite Her Majesty’s Revenue & Customs (HMRC) as the largest single creditor at the point that a company enters administration," says Simon Plant, Partner at SFP insolvency practitioners based in London's Docklands. "And this number could rise still further as companies who took advantage of the Government’s ‘Time To Pay’ initiative have failed to make provision for their future tax liabilities. 'Time To Pay' is the ticking time bomb that no-one wants to mention."

Simon says that there is a clear trend developing in recent appointments, with the amounts owed to the taxman ranging from £125,000 to nearly £500,000. "These are quite extraordinary sums of money that seriously impact on cashflow and not infrequently lead to a company’s collapse without professional help. HMRC is now quite literally ‘calling in their debts’. Those that have failed to accrue for those debts or naively believe they will be given more time are in for a rude awakening."

"The larger companies are the ones that attract the headlines, but the hidden tragedy lies within the SME community." He is concerned about the size of businesses now failing or entering administration and, in particular, the amount of jobs being lost or under threat. "The economic downturn seems to be affecting all manner of businesses from printing companies to recruitment agencies, but it is the SME sector, with relatively modest turnovers employing 40 or 50 staff, that seem to be suffering most."


For more information:
www.sfplant.co.uk/


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