IR lose place at front of debt queue

Claims that Government agencies will become more aggressive in debt collection as a result of their loss of preferred creditor status have been denied by the Inland Revenue.

Taxation services' provider, IRPC, predicted that this was grim news for smaller companies and that two Government agencies, Inland Revenue and Customs, have already developed a reputation for being less than sympathetic in their debt collection strategy.

At present, the preferential status of debts owed to the Inland Revenue and Customs & Excise means that if a company becomes insolvent they are one of the first to be paid. However, with the loss of their preferred creditor status they will be on an equal footing with other creditors.

Neil Tipping of IRPC said: "The idea that Customs & Excise and the Inland Revenue may be less lenient in their treatment of businesses that owe them money is worrying."

"They are already very reluctant to negotiate the rescheduling of debts. When a business does admit that they are having difficulties paying their tax liability, the usual response from the two tax agencies is that they should either sell off all their assets or take on debt from a third party to pay them. It is not a business friendly approach!

"We have even seen cases where tax collectors have suggested that the business owner sell their house to pay off the Revenue."

UKTECH put these claims to the Inland Revenue that they would become more aggressive as a result of the loss of their preferred creditor status.

An Inland Revenue spokesman said: "Our aim is to do our best to help and support viable businesses suffering from temporary financial difficulties to allow them to trade through their problems and help the business survive.

"There will be no change whatsoever in how we go about our business in response to the changes in the law you have highlighted. We contact customers early to resolve problems, educate and obtain payment."