The taxman is making the economy worse by 'going in with the knife' and creading increasing bad debt, according to Robert Morris, Morris Furniture Group joint-md.

'I cannot believe the amount of bad debt we are having. It seems HMRC are not giving anyone a chance. If you do not pay VAT or tax it seems HMRC is going in with the knife,' he told The Herald.

'It's not just the bad debt, it is the continuing business that falls as well.'

Morris was commenting on the group's financial results for the year ended January, which saw the completion of the group's reorganisation including the sale of its office furniture division. Pre-tax profits rose 6.2% to £550,000 as sales dropped 27.5% to £22.4m.

'Operationally I am pleased. Quality is good, labour relations are good: all the things that are difficult to get right. For me the most important thing in the business is direction not profit. I want to make sure we are doing a good job.

'Volumes are light, margins are light. We will probably start expanding next year. This year is about the same as last year.'

However Morris was optimistic about the future. 'We have a lot of stock. Instead of having to buy a container we can deliver in four to six weeks on average. The minute the market comes up and we hear the starting gun, we are in great shape to start sprinting,' he says.

A HMRC spokesman defended its actions: 'There is little HMRC can do for a business whose viability is dependent on not paying the UK taxes to which they are liable.

'HMRC has an outstanding track record in supporting those who are experiencing genuine difficulty paying their tax debts, and does not initiate legal proceedings against any business lightly. HMRC only initiates administration, winding up or bankruptcy action where it believes this is the best course of action to protect the interests of the Exchequer.'

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