HM Revenue & Customs (HMRC) is reportedly starting to take a tougher line on small business owners who see bankruptcy as an easy solution to theirs and their company’s tax debt problems.
Officials at the deparatment have become increasingly concerned about unpaid taxes amongst the owners of small businesses. It seems that many of these indebted entrepreneurs are using bankruptcy as a way to tackle their tax debt problem.
Leading law firm Wedlake Bell has warned that HMRC will start to crack down on those who see bankruptcy as a way to avoid facing up to their tax responsibilities. Edward Starling, who is the head of business recoveries at the law firm, said:
“The authorities are making an example of business owners who have allowed their businesses to run up insurmountable tax debts by banning them from involvement in senior management positions of a company for a long time,”
Meanwhile, the Insolvency Service has reported that the number of bankruptcy restriction orders it has secured has increased by 21 per cent in the last year. These orders, which are granted only when a court is convinced that the dishonest or reckless behaviour of company directors contributed significantly to a business’ debt problems, were issued to 443 business owners in the last twelve months.
This is a huge leap compared to four years ago, when only 80 bankruptcy restriction orders were obtained. If a business owner is issued such an order, it limits their access to credit and may even stop them heading up a company for up to 15 years.
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