More businesses face winding-up petitions over unpaid tax

By Matt Storey, Partner

Balancing the books can be a challenge for many businesses as the cost of most things steadily increases.

While some tough budget decisions need to be made sometimes, neglecting your tax bill is not a good idea and can lead to the collapse of a business.

Winding-up petitions for unpaid tax debts have risen by 31 per cent, so now is the time for businesses to get serious about corporate tax planning so they can stay compliant and operational.

Why are winding-up petitions on the rise?

Small businesses are continually seen as not taking tax seriously enough, resulting in HMRC pursuing more direct action to combat the issue.

The tax gap is growing, with £59.2 billion, or 6.4 per cent of all tax owed, not collected in the 2024/25 tax year and 62 per cent of the value of the tax gap came from small businesses.

This problem sits alongside an astonishing amount of tax debt, which amounted to £42.8 billion, or five per cent of total tax receipts, at the end of the 2024/25 tax year.

With the Government under increasing pressure to find additional funds to meet the needs of the population, it is unsurprising that more measures are being taken to collect unpaid tax.

More debt management officers are set to be recruited, with an estimated 2,400 planned by 2030.

This will see HMRC better able to investigate and bring action against businesses that are failing to pay their tax in full and on time.

A compliance crackdown was inevitable given the unchanging nature of the contribution to the tax gap by small businesses and it is believed that the threat of liquidation will be sufficient in making business owners prioritise their tax bills.

Can businesses afford to pay their tax bills?

It might seem intimidating for small business owners who are already struggling to make ends meet to face such measures regarding their tax bill.

However, ignoring tax obligations has never been an effective cost-saving strategy, especially when more active engagement with tax can result in a lower cost over time.

The reason why large companies contribute far less to the tax gap and are less likely to suffer the strain of tax debt is because they devote resources into managing tax exposure.

Small businesses need to be more proactive in seeking the help of an accountant to get a firm sense of what tax is owed and how bills can be managed.

Our team can work with you to highlight your tax position and recommend ways to structure the business to ensure that you are operating tax efficiently.

Many businesses overlook reliefs as they do not know they apply or are unsure how to use them and may operate in ways that result in more tax being owed than is strictly necessary.

Having our team by your side can ensure that you are staying compliant with your obligations while also keeping your tax bill under control.

We can also work with you to get a better sense of your budget so that you can more easily accommodate the cost of a tax bill into your financial plans without sacrificing the functionality of the business.

Take the stress out of paying your tax bill by getting in touch with our team today.