The latest research from insolvency trade body R3, has found over half of insolvency practitioners believe HMRC makes it harder to turnaround struggling businesses than wind them up. 54% of those surveyed think HMRC finds it easier to close down insolvent businesses.
71% of IPs believe the overall process is made more challenging by HMRC, with only 10% claiming the government department has been helpful when rescuing businesses.
Over 54% of IPs have had to wait three months for clearance from HMRC while it’s thought that over a third of letters sent to HMRC are lost or ignored.
President of R3, Philip Sykes, said “The insolvency profession believes the government’s behaviour as a creditor makes it harder to manage insolvency processes and rescue businesses. It’s one of the creditors the insolvency profession looks forward to working with the least – which is a problem given how often the government is a creditor in insolvencies.”
HMRC can cause many problems along the process, including delays in returning paperwork and increasing costs. While it’s understood there are budgets and time limits to stick to, the insolvency profession believes HMRC has the power to improve procedures.
With the recent announcement that HMRC is changing its department structure, there has been a suggestion to create a dedicated insolvency unit to handle all insolvency and business rescue matters. This could help prevent delays and improve efficiency.
It’s clear to see the benefits of a more efficient department as this would not only help recover as much debt as possible but help other creditors along the process too.
IPs want to work with HMRC to help struggling businesses and it’s hoped this process will improve over time.