We have mentioned this before, HMRC are to be given the powers to dip into the bank accounts of debtors, individuals as well as companies and help themselves.
Individuals and businesses need only owe more than £1,000 to the tax man and he can, without a court order, help himself to their cash as long as he has sent a few reminders.
These new powers are due to come into force in April 2015. They will give the tax man carte blanch to take cash, as long as he leaves £5,000 across the accounts.
Once HMRC have removed funds from the bank accounts, 14 days will be given to negotiate a settlement plan. If successful, this would mean the return of an agreed proportion of funds. Conversely, if agreement is not reached, this will lead to HMRC retaining all funds removed.
It seems that we are going back in time in terms of insolvency legislation. Until 2002 HMRC had preferential status, meaning that if there was any cash in the pot for creditors, they got paid before the unsecured creditors. Since 2002, HMRC have ranked alongside everybody else. The new powers are going to ensure HMRC will be able to pay themselves prior to the onset of a formal insolvency process.
These measures may force many SMEs into formal insolvencies. These SMEs may have saved monies to pay wages and for vital supplies and if monies are removed from their bank account without notice and without consultation then these businesses will have little other option but to enter into formal insolvency processes.
What happens if they take too much? Well, they can take as much as they like and then argue whether it was actually due or not and if not, they will pay it back!
The Sheriff of Nottingham is back robbin’ hoods again.
It is important for anybody facing financial difficulties, whether personally, directors of limited companies or partnerships, to seek advice from a licensed insolvency practitioner as soon as possible.
To take advantage of our free consultation, please telephone Stella Flemmings on 01377 257788, 01724 230060 or 01904 520116 and she will make you an appointment with one of our insolvency professionals at our Driffield, Scunthorpe or York offices.
Redman Nichols Butler has had a York office for nearly six years now and specialises in advising SME businesses in York and North Yorkshire. The Redman Nichols Butler York office address is Westminster Business Centre, Nether Poppleton, York, YO26 6RB.
Redman Nichols Butler has had a Driffield office for 16 years now and specialises in advising SME businesses in East Yorkshire. The Redman Nichols Butler Driffield office address is Maclaren House, Skerne Road, Driffield, East Yorkshire, YO25 6PN.
Redman Nichols Butler has had a Scunthorpe office for nearly 4 years now and specialises in advising SME businesses in Scunthorpe, Grimsby and all over North East Lincolnshire. The Redman Nichols Butler Scunthorpe office address is Suite 8b, Normanby Gateway, Lysaghts Way, Scunthorpe, DN15 9YG.