Small Talk: Taxman is cracking down hard on the small companies with very little hope

Is the taxman getting tough on small businesses struggling to pay their bills? HM Revenue & Customs' own figures suggest this may well be the case.HMRC's data, crunched by Wilkins Kennedy, the accountant, reveals that in the 2011-12 tax year, it presented 57 per cent more petitions to wind up companies with unpaid tax bills than in the previous 12 months. It sought to liquidate just over 5,300 companies last year, up from about 3,400 in 2010-11.

The get-tough approach is evident elsewhere in the data too. Syscap, the independent finance provider, points out that HMRC's use of 'distraint' doubled during the 2011-12 tax year.Distraint, in which HMRC seizes goods from companies with unpaid taxes – it is then entitled to sell them if the bill is not paid within five days – is an aggressive tactic that has most often been used against businesses with unpaid payroll taxes such as income tax and National Insurance. It appears to have been used more widely last year, with 10,577 businesses hit, up from 5,520 in the 2010-11 financial year.

HMRC points out that it tries to be sympathetic to businesses struggling to pay their tax bills. In particular, the Time to Pay scheme, which was ramped up during the recession and continues to this day, offers firms the chance to spread tax payments over a much longer period than usual.

However, there has been some grumbling in recent months from accountants convinced the taxman is now far more likely to reject applications from businesses for extra time. This may suggest the more hardline approach implied by the data available for the period up to April last year, when the 2011-12 tax year came to an end, has continued since then.

We don't know exactly how many businesses are now on the Time to Pay scheme because HMRC stopped publishing the statistics in 2011 (in fairness, only after a three-month consultation period during which no one complained about the proposal). However, in the final quarter before the statistics were dropped, rejections of Time to Pay applications rose by a third, which suggests that even then HMRC may have been beginning to run out of patience.

Should we be concerned about a tougher HMRC? Well, firms with cashflow constraints and squeezed finances certainly should be – many companies have gone out of business because of their inability to pay tax bills and an attack from HMRC is a very real threat. Taxpayers, however, may see this issue a different way (unless they happen to be employed by an SME in danger of going under). The number of hugely indebted companies that have no viable future but are staying alive thanks to low interest rates and forbearance from their banks – the zombie businesses – is so large that it may be holding back the economic recovery.

Might it not be better for the taxman to take what it can get now, rather than allowing the zombies to soldier on, taking business from more viable rivals, including start-ups? The sudden spike in high-profile retail collapses suggests the banks may be moving towards this position too, cutting their losses sooner rather than later.

HMRC's responsibility is to the Treasury, whose coffers are as empty as ever. There is an argument for looking sympathetically on businesses caught out in the short term, if they have the opportunity to be generous contributors to those coffers once they have recovered. HMRC appears to be taking the view, however, that an increasing number of businesses will never fulfil that potential.

Market's demise a plus for rivals

The demise of the Plus Markets business last year continues to be a boon to rival exchanges, which have been steadily picking up business over the past 12 months. Though the exchange run by Plus was sold to Icap, where many of its companies continue to trade on the Icap Securities and Derivatives Exchange (ISDX), rivals are catching up with it.

Those rivals are led by GXG Group, which bills itself as a pan-European stock exchange for small and medium-sized enterprises. It now lists 73 companies across three market platforms, and saw almost £200m of share trading last year – 17 businesses listed on GXG in January alone.

ISDX lists in the region of 135 companies, including some of the best-known inhabitants of Plus, such as Arsenal Football Club and the Shepherd Neame brewing business, which have stayed with the market through its change of ownership and rebranding.

Alkane set for fracking lift

Alkane Energy, the Alternative Investment Market-listed power group best-known for its interests in Wales, the Midlands and the North of England, could be one beneficiary of the Government's announcement in December that it will allow fracking. The controversial technique may enable resources companies to get at the UK's substantial shale gas reserves.

Alkane revealed on Friday that it has begun evaluating its shale gas assets, which could potentially give the group a substantial boost. Joe Stokeld, a mining analyst at Alkane's house broker VSA Capital, which maintains a buy recommendation on the stock, says the company's relatively substantial shale gas opportunities come on top of already solid output growth.

"Alkane seems poised to benefit from any positive developments that take place in the UK shale gas sector, if it should choose to enter it," Mr Stokeld said.

Alkane shares closed at 27.75p on Friday.

Small Business Woman of the Week: Brynne Herbert, founder, MOVE Guides

I started out as an investment banker and worked across Asia. Then I came to the UK to do an MBA at London Business School. Every time I moved, it was a huge pain logistically and it felt like opportunities that should have been exciting became daunting. When I arrived in London, I ended up in a miserable flat with no power, no bank account and no mobile.

That's where the idea for MOVE Guides came from. It started as a guide book I put together while I was doing my MBA but evolved into something more holistic. We offer a business-to-business, cloud-based portal for employee relocation and a consumer website aimed at individuals.

Some relocation services focus on high-value families but the feedback is variable and no one serves Generation Y people, who want to be able to do all this online. We take much of the customer service responsibility and serve as a single point of contact.

We raised £400,000 of business angel funding last year from people like Sherry Coutu and Kevin Eyres [the well-known technology investor and the LinkedIn executive respectively] and within six months of that we were beginning to see revenues increase. We'll probably have another funding round this year so we can scale up the business.

Start your day with The Independent, sign up for daily news emails
News
Lois Pryce... Life Without a Postcode. Lois lives on a boat with her husband.. Registering to vote in the election has prooved to be very difficult without a fixed residential post code. (David Sandison)
newsHow living on a houseboat meant I didn't officially 'exist'
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Sport
Steven Fletcher scores the second goal for Scotland
cricketBut they have to bounce back to beat Gibraltar in Euro 2016 qualifier
News
news
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing