Business tax arrears a ticking timebomb?

Deferred tax could be taxing for small businesses as ‘time-to-pay’ arrangements run out.

By News Desk
28th September 2009 at 15:37

Deferall of tax a problem for SMEsOver 200,000 businesses could be facing a tax bombshell, having taken advantage of government ‘time-to-pay’ arrangements which let SMEs defer their liability with HMRC to ease cash flow.

Some £2.7 billion has already been deferred up until June this year, according to official figures.

Of that total £1.1 billion is now up for repayment, although 33,000 repeat arrangements have already been agreed amounting to £440 million.

On top of these figures, business debt owed to HMRC has risen enormously from £2.7 billion to over £27 billion over the last 12 months.

Some, including business restructuring specialists, MCR, are concerned that with the possibility of smaller businesses finding times tough, even if we emerge from a ‘technical recession’, the building up of tax owed could aggravate the very cash flow situation the Business Payment Support Service was set up to ease.

Steve Clancy, partner at MCR, said:

… the growing numbers of cash strapped companies that have put off paying taxes are at risk of insolvency because of this. Increases could start as soon as the end of the year as, despite the scheme still being available, we have seen HMRC tighten up on the procedure considerably since August 2009.

[Picture credit: Andy Beez licenced from Flickr]

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  1. […] businesses to defer paying corporation tax and VAT, although some have argued this could lead to a ticking timebomb of repayment further down the […]

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