The taxman cometh: HMRC and company insolvency


Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

The taxman cometh: HMRC and company insolvency

The idea that the UK’s business tax regime has become increasingly complex over recent years, enveloping companies in a veritable web of red tape, has become something of an accepted wisdom in recent years.

It is one thing, however, to believe that to be the case and another thing to demonstrate the actual extent to which firms experience difficulties in getting to grips with the shifting tax landscape.

That is one reason why myself and my colleagues at Enterprise Tax Consultants submitted a Freedom of Information (FoI) request to the Insolvency Service.

We wanted to determine how many company collapses are due – in whole or part – to their amassing debts to HMRC over the last five full years for which figures are available.

What we discovered surprised us.

As I’ve been telling a number of media outlets, including Metro and Economia magazine, the number of compulsory insolvencies since 2012 has fallen by more than 40 per cent.

That might be taken as an indication of positive corporate health but look a little deeper and it emerges that HMRC is six per cent more likely to feature as a creditor. Arguably of more alarm is the fact that the Revenue is now the largest single creditor in two-thirds of cases

The sums involved are also escalating. A total of £830 million was owed to the taxman last year – up 47 per cent on the amount outstanding during the previous 12 months.

What isn’t clear from these figures, of course, is if HMRC’s efforts to recover tax due are themselves a factor in companies being tipped over the edge or it is more simply down to companies being unable to balance their books.

That position gains additional credence when you take into account other data suggesting that businesses owe HMRC more than £4 billion in VAT and Corporation Tax payments.

It would be perfectly fair when presented with such material to suggest that the taxman could be doing more to help those businesses which experience difficulties.


If you currently have any issues with HMRC and company insolvency, are in arrears with your tax or are experiencing any difficulties with the UK tax system – whether you are a business or an individual – then please do not hesitate to get in touch.

We are a firm of specialist tax advisers and deal with a vast range of tax issues and opportunities for all types of clients based in the UK and overseas. We pride ourselves in being able to deal complex solutions for clients in a straightforward manner. For a list of our services please visit here.


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