The Independent has an interesting story about HMRC’s increasingly tough attitude to sole traders and partnerships who go bankrupt owing HMRC money.

Nobody ever thinks they are going to fail in business but when you’re short of cash it’s too easy to “forget” to pay over the PAYE you’ve deducted from employees and to delay paying your VAT. And then there is your own tax bill which  isn’t due for another 18 months ……

The article quotes Edward Starling of Wedlake Bell as saying

The authorities are making an example of business owners who have allowed their businesses to run up insurmountable tax debts by banning them from involvement in senior management positions of a company for a long time

This may be yet another reason why you should consider trading as a limited company.

Last week I sent my MP a link to my post Does this government give a sod about small business? and within a few hours he had replied saying

This is absolute madness and I am pleased to confirm that I have written to the Chancellor to urge him to intervene to reverse the decision.  I do hope that he will see sense but I will write again, when I have received the response.

Thanks Tim and thank you for not telling me to consider the big picture like the C.E.O. of my Institute said in his blog at the end of last year.

It’s tough for virtually everyone at the moment but especially tough for small businesses so I’m puzzled why HMRC have made it harder to pay taxes by instalments under the Business Payment Support Service.

Typically though their ‘reluctance’ has been spun translated as

Demand for the BPSS is falling – requests in the first half of 2011 were 37% of 2009 levels.

Fortunately, one or two accountants, know the truth and more importantly are willing to state it.

John Wheeler, at the foot of the article, says:

Demand is only falling because the Revenue are making it obvious that they will not grant repeat requests.

If the economy doesn’t improve soon there is going to be a great deal more businesses unable to pay their taxes at the right time. David Cameron, Nick Clegg and Vince Cable had better tell HMRC who is running the country before yet more small businesses are forced to close because HMRC will not allow them the time to pay their taxes.

P.S. I’ve sent a copy of this to Tim Farron, my Member of Parliament, and I urge you to do the same. Even if it’s not a problem for you it may well be for one of your customers, suppliers or even worse your employer.

The Times ran a story yesterday titled

Talk about business loans now, before it is too late

Quoting Peter Ibbetson, the chairman of lending to small and medium-sized businesses at Royal Bank of Scotland, the article advises businesses to start talking to their banks now rather than later.

RBS expects a surge in cashflow needs in the second quarter of the year through restocking, re-employing people and increased investment and the banks may not have enough money to go around everyone.

So, if you’re planning to expand this year, make sure one of your New Year Resolutions is phone your bank manager this month to discuss extra funding for your business. and make sure you don’t break it!

P.S. Don’t worry, the banks won’t actually run out of money they’ll just run out of the money they have allocated for lending to SMEs.