According to the latest figures, there has been a dramatic increase in the number of firms facing asset seizures from HM Revenue and Customs (HMRC), following failure to pay their tax bill on time.
The statistics revealed that the number of businesses facing these asset seizures jumped up 45 per cent compared to 2016/17 and has increased more than four times since 2014/15.
HMRC has the power to take assets from businesses that do not have the cash to pay their tax bill. This can include critical items including IT equipment and machinery, the removal of which can in some circumstances result in a firm being forced to cease trading.
Last year HM Revenue and Customs seized assets from 2,833 businesses as the government ramped up pressure on firms not paying tax on time.
The debt collection policy comes at a time when businesses are already facing other major potential risks including rising interest rates and increased barriers to trade after Brexit.
Official figures reveal that, despite the rapid rise in the number of seizures, the taxman raised just £69.7m by selling businesses’ assets last year.
The approach has met criticism from some, who believe better methods of recouping tax should be investigated.
Conrad Ford, Chief Executive of business loan website Funding Options said: “HMRC is jeopardising the future of these businesses by removing their assets.
“There are often genuine reasons why these firms aren’t able to pay their tax bills on time, such as cash flow issues stemming from late payments from clients.
“There may be a better way for HMRC to recover the tax than removing a business’s vital assets.
“Cash flow difficulties that mean a business cannot settle its tax bills should not spell the end for them.”