HM Revenue and Customs (HMRC) officials have successfully won court orders to shut down 466 companies north of the Border in 2008 and 2009 after they failed to pay their tax bills on time.
The figures, published for the first time today, were described as "astounding" by politicians who believe the tax authorities, desperate to plug the UK Government's historically wide budget deficit, are now hounding some solvent firms out of business.
The numbers have emerged just 10 days after the Chancellor's Budget statement in which he insisted that his "time to pay" scheme, announced last year, had helped businesses spread billions of pounds' worth of tax payments over a timetable they can afford.
Opposition politicians said they were finding Alistair Darling's much-vaunted leniency to tax debtors hard to reconcile with what they saw as an aggressive pursuit of companies that was damaging to the Scottish economy.
HMRC revealed that it had secured 254 winding-up orders in 2008, resulting in nearly a quarter of all corporate insolvencies in Scotland that year, and another 212 in 2009.
The impact of tax enforcement activity on Scottish business life during the recession may also be greater. As well as targeting companies, HMRC also secured orders for the sequestration – the Scottish term for bankruptcy – of 1,917 individuals, some of them sole traders, in the same two-year period.
Insolvency specialists said they had detected a hardening of attitudes among HMRC debt collectors in recent months, despite much welcomed and still extremely popular pledges by Darling to give cash-strapped firms more "time to pay".
High-profile casualties include Highland Airways, which went into administration last month owing £500,000 in tax, and the rail engineering firm Jarvis, which had more than 1,000 workers.
The toll also includes smaller firms, such as Skye-based technology company Gaeltec, which went into administration last week owing £24,000 in national insurance contributions. Its 12 employees are now out of work.
MPs yesterday said the current crop of administrations might be just the "tip of the iceberg" as there was usually a time lag before the full effects of a recession kicked in. They called on HMRC to ease up on firms that were temporarily struggling to pay their tax bills during the current economic climate.
Danny Alexander, the MP for Inverness, Nairn, Badenoch and Strathspey and chief of staff to Liberal Democrat leader Nick Clegg, said there was a serious question mark over a policy of HMRC closing down businesses that had a chance of surviving, when it resulted in the state paying out even more in unemployment benefits and other costs than it received in tax. "There must be thousands of people in Scotland who are out of work right now because of HMRC policies," Alexander said.
He said the get-tough attitude had been demonstrated in the case of Highland Airways, which employed 100 staff.
The airline, which mostly provided subsidised lifeline services for the Hebrides, went into administration owing around £3m, including more than £500,000 in tax. HMRC had turned down a repayment plan offered by the airline, which is understood to have been in talks with a rescuer.
Alexander said: "I was astounded by what happened to Highland Airways. They had a prospective partner who would have rescued the business. The main issue they had was their tax debt, which HMRC said had to be paid back within a year. All the other public sector bodies (that were owed money] were playing ball. There was good will on all sides except HMRC."
Mike Weir, the Nationalist spokesman on the economy in Westminster and a former solicitor, said businesses in Scotland were facing a "mixed picture" from HMRC, with some enjoying support and others facing tough measures.
He said: "It doesn't make sense to put businesses into administration for small debts. The Revenue may get some of its money back, but other creditors, suppliers and so on, probably won't. And the Treasury will lose revenue in tax and national insurance from the people who lose their jobs."
Derek Brownlee, the Conservative spokesman on the economy in the Scottish Parliament and a former tax accountant, said mass insolvencies prompted by HMRC would lag behind the recession. "I suspect what we are seeing in these figures is the thin end of the wedge and we are going to see an explosion of insolvencies in the years to come."
'HMRC just would not budge'
GAELTEC was exactly the kind of firm wanted in the Highlands. Small, clean and high-tech, the medical electronics manufacturer brought jobs and a little bit of prosperity to its corner of Skye.
The company, based near Dunvegan castle, was so important to the local economy that more than a third of its shares were held by government development quango Highlands and Islands Enterprise.
Last week the business went into administration, not because it was trading insolvently but because HM Revenue and Customs would not wait to receive an outstanding national insurance bill of £28,000.
"HMRC just would not budge," said Syd Johnson, Gaeltec's managing director. "It is now costing them a lot more because all the people we have made redundant are now getting benefits. We reckon it is going to cost more than £100,000 in redundancy alone.
"We just didn't have the cash flow to pay the debt, which stemmed from 2008. HMRC would not give us any longer to pay it."
Johnson, 65, remains stunned by the move. He had been with the firm since 1972, shortly after it was set up, with Government support, to provide an alternative to farming and tourism jobs for the fragile local economy.
Administrator Grant Thornton is currently looking for a buyer to take Gaeltec on as a going concern. Officials are said to be hopeful as Gaeltec has only one competitor, a firm in Switzerland.
HMRC forced Gaeltec into administration – the body was pursuing a winding-up order against the company – despite demands from the former Liberal Democrat leader Charles Kennedy, whose constituency includes Skye, for a stay of execution for the firm. Kennedy raised the matter with Scottish Secretary Jim Murphy, who made inquiries but nothing was done.
Kennedy said: "The actions of HMRC are threatening to undermine the future of a strong company in a small community."
Highlands and Islands Enterprise, despite being a public body, could not intervene. "One of the problems is that HIE are a major shareholder in the company and they couldn't do anything," Johnson said. "They can't be seen to be favouring themselves. They had to take a back seat."
'Months of hell'
ANOTHER established business, a firm of joiners in Nairn called Carl Andrassy, is also facing a winding-up petition from HMRC. The threat against the firm is currently on hold after another Lib Dem MP, Danny Alexander, asked the Treasury to investigate the matter. But the company's owner, also called Carl Andrassy, said: "We have had months of hell trying to convince the HMRC that we are solvent. We have a full order book well into next year and have said we are willing to pay half of our £100,000 debt now and another half in six weeks. We had a hard time at the end of 2008 and beginning of 2009, when everybody's chequebooks seemed to shut. But we are OK now."
David Leask
