By Amanda Vigar, Managing Partner, V&A Bell Brown LLP
At a time when small and medium sized businesses (SMEs) are
still struggling to make ends meet, I could not believe my ears when I learned
that Companies House and HMRC are complicit in allowing debt-ridden companies
to avoid their creditors.
Companies House are automatically striking off companies
that haven’t filed their accounts or annual returns despite objections from
creditors. In the past this was swayed by objections from HMRC - who are often
amongst those creditors - but they no longer seem to be objecting if the
amounts owed to them are small.
Quite rightly, Companies House is asking creditors to show
that they have a valid debt and that it has been chased, but there comes a
point when it’s not economically viable for small businesses to carry on
pouring good money after bad! It doesn't mean that the debt is any less valid!
Their only hope then is that someone else stumps up the money to take the
company through proper insolvency proceedings. But alas, Companies House
doesn't see it that way and actively strike companies off for pure
administrative non-compliance.
Whilst I normally have sympathy with HMRC, in these
situations, it’s often HMRC that gets hit hardest. HMRC loses the tax/VAT/PAYE
from the business that has gone bust AND the creditors get a bad debt write off
claim too - so HRMC loses out twice over! So why aren’t they objecting to
Companies House and stopping them from allowing the offending Directors to walk
away from their responsibilities, often scot free?
SMEs are the life-blood of our nation’s economy, after all,
and it serves no one any good at all to be forced under - except the real tax
evaders, that is!
Too often Directors stick their heads in the sand and hope
things will go away whilst taking others down with them. The Government needs
to insist that to get rid of a company either the Directors have to confirm
that the company has satisfied all its creditors or that a proper insolvency
process is gone through. Small businesses don’t have the financial or time
resources to do this for themselves, so for once the Government needs to stop
treating them as unpaid tax collectors and policemen and help them to get paid
for the work they’ve done in good faith.
