Wylie & Bisset, Accountants and Business Advisers, is forecasting an explosion in the number of winding up orders and company insolvencies as HMRC tackles a massive backlog of debt by enlisting private debt collectors to pursue billions of pounds in unpaid taxes.

Under Chancellor Jeremy Hunt’s proposals, as part of a major crackdown spearheaded by HMRC the UK government is to contract debt collection agencies to chase down individuals and companies owing up to £4.3 billion in unpaid taxes.

The move comes as the Office for Budget Responsibility revealed that the amount of unpaid tax available for collection has doubled in four years. The scheme, set to commence next month, is expected to raise £240 million in its first year, rising to £895m in 2025-26.

Craig Allison, associate director in Wylie & Bisset’s insolvency team, said: “What the introduction of using third party debt collectors indicates is that HMRC is overwhelmed and struggling to cope with the recovery of VAT, PAYE and Corporation Tax, so it would not be surprising to see a significant increase in company insolvencies, such as liquidation and administration, which are already at levels unprecedented in modern times.”

Mr Allison advises any directors concerned about the repayment of their taxes, or under pressure from HMRC, to consult an insolvency practitioner for advice.

“Directors who bury their heads in the sand as their company’s liabilities are rising are in real danger of wrongful trading,” he warned.

“If they are concerned about their company’s taxes or are being pursued by HMRC, then they should seek professional advice. While insolvency can have a stigma attached to it, directors can use an insolvency process to cut ties with a sinking ship in a timely manner.”

ENDS

For further information please contact Craig Allison on 0141 566 7000

Issued on behalf of Wylie & Bisset by Liquorice Media tel 0141 332 4935 www.liquorice-media.com

Date: 18 Mar24