HMRC demands VAT up front from revived pre-pack businesses
Taxman accused of thwarting enterprise by issuing penalty fees for phoenix companies
Entrepreneurs who use pre-pack administrations to revive collapsed companies
could be thwarted by HMRC seeking up top £100,000 in VAT.
The taxman has brought back into use a little-known VAT law that allows it to
demand a penalty fee or “security for future VAT” for those restarting
businesses, according to
The
Times.
The amount HMRC can demand is based on the company’s own declaration of
estimated future revenue.
The policy was attacked by the Federation of Small Businesses, which claimed
it goes against the government’s efforts to encourage failed business owners to
restart and risked thwarting enterprise.
