No sympathy: MPs criticise HMRC over interest rate swaps mis-selling victims
MPs have accused HM Revenue and Customs (HMRC) of pushing many small and medium sized enterprises (SMEs) into administration despite being aware of their current financial difficulties derived from a mis-sold interest rate swap.
Thousands of SMEs have been left in dire straits after being sold highly complex interest rate swap products which were designed to protect them against rising interest rates. However many are likely to be eligible for financial damages after lenders failed to provide a full explanation of the associated risks, if rates dropped for example.
Despite the Financial Services Authority finding serious failing in the sales practice of interest rate swaps, HMRC are being perceived as “rather less than sympathetic” by MPs in its handling of cases involving affected businesses. Guto Bebb is the Head of the All-Party Parliamentary Group on Swaps Mis-selling:
“It is very concerning to see that HRMC appears intent on pushing businesses that might well be eligible for redress into administration.”
He went on to suggest the tax authorities are showing no flexibility.
An interest rate swap protects a business should interest rates increase. Should interest rates fall below the agreed rate, however, the business is liable for the cost of the swap and is therefore required to make up the difference.
These crippling repayments and substantial exit fees have led to many SMEs going out of business, a situation seemingly made worse by the rigid HMRC.
Content correct at time of publication