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The Law Society Gazette reports small/medium sized law firms are facing financial squeeze

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Syscap reported that it has received 410 requests from law firms needing assistance to meet their tax liabilities which were due at the end of January. This is a staggering increase of 58% on the same period last year. They have also seen a higher number of firms looking for loans to meet ongoing liabilities and day to day cash flow but the emphasis really seems to be on tax obligations now that the "Time to Pay" process to allow payments to be deferred is being wound down. 

The pressure on HMRC to collect unpaid tax is clear and many would agree that funds into the public pursue are of paramount importance. The tactics being used to facilitate such collection are clear as Syscap also suggests the number of instances where HMRC has utilised asset seizure to recover unpaid amounts rose by 92% in the year ending March 2012 compared to the previous 12 months. 

Whilst a tight reign on unpaid tax is sensible there surely must be some flexibility as small/medium sized businesses are suffering from a period of very unpredictable cash flow with customers/clients taking time to pay bills hindering the income stream of the business.

By solicitor, Kathryn Maclennan