UK auditors and accountants Xeinadin have reported that 41% of businesses with 150 to 249 employees are bending tax rules, citing financial pressure as a reason for exploiting loopholes.
But they would be wise to be wary as Accountancy Age has reported that HMRC is increasingly pursuing company directors to pay the tax bills of insolvent companies.
The findings, from Pinsent Masons law firm, showed the amounts paid rose more than sixfold from £2.3m to £15m in the last year (year end March 31, 2024).
The 52 directors who were pursued by HMRC for their companies’ tax debts in 2023/24 is more than three times the 16 that were pursued in the previous year.
Sophie Warren, Senior Tax Manager at Pinsent Masons, warns company directors that HMRC is now much more likely to pursue their personal assets if they shut down businesses and leave tax bills unpaid.
HMRC can issue ‘Joint and Several Liability Notices’ to make directors personally responsible for the unpaid tax debts of their companies if the company has entered into tax avoidance or evasion arrangements when their company has started, or is likely to start insolvency.
So exploiting loopholes is perhaps unwise in these circumstances especially as insolvencies have risen to their highest levels since 1993.
Directors need to make sure that they know what their duties and obligations are and also that their accounts are accurate and up to date.
We have a free board briefing that can help you in dealing with Overdue Tax & HMRC Debt Collection and you can find it here:
https://www.k2-partners.com/wp-content/uploads/2021/09/K2-Board-Briefing-Series-ref-no-BB12.pdf