There follows a guest post by an author, who wishes to remain anonymous, who is an experienced independent restructuring and turnaround professional with successful HMRC dealings going back over 20 years.
It was always the case that the Government’s rush to help businesses at the beginning of lockdowns would inevitably lead to some issues further down the line. In this article I argue that there is a disconnect between the broad policy agendas of the Treasury and HMRC. In particular, HMRC should not try to close businesses that have been adversely affected by COVID-19, provided the businesses can make a good case that they can recover over a reasonable time period. HMRC should not unilaterally apply a timescale for debt repayment that is unrealistic for a business.
The Treasury has always appreciated that COVID-19 affected businesses might not recover for several years. The introduction of the Business Recovery Loan Scheme, and its recent extension until June 2022, is evidence of this. The Business Recovery Loans are repayable over periods up to six years and are underwritten by Government guarantees of 70-80%.
There can be no doubt that the overall policy of the Treasury is to support COVID-19 affected businesses as long as reasonably necessary.
However, HMRC does not appear to have got the memo and is largely adopting the same approach to collecting overdue debt from businesses that it used pre-pandemic.