The taxman is doing its own version of a bailout for UK businesses struggling
in the current hostile climate.
Some would say this is a lot more worthy than the boost given to certain
financial institutions, but how long can the taxman continue propping them up as
the number of SMEs looking to defer their tax bills shows no sign of abating?
As of 27 September, 210,000 time-topay arrangements have been set up,
putting £3.71bn of cash in limbo. This includes secondary businesses such as
trading partners and suppliers dependent on 150,000 companies taking up the
However, HMRC is now also dealing with requests for repeat deferrals and
exact numbers were not available.
“Our current numbers are being validated and we therefore have no figures to
give at present,” a spokeswoman said.
According to insolvency experts, HMRC is now coming down harder on deferral
applications as the amount of money being kept out of the coffers keeps piling
up, while balancing this against helping companies to stave off the
Rik Heap, director of LC Corporate Strategies at insolvency specialists
Leonard Curtis, said HMRC remained largely supportive of SMEs but warned that
the collectors were looking to maximise the tax take by demanding extremely
robust business plans.
“If a business plan fails to meet the required standard and a business fails
to pay its monthly tax installments the taxman may now come down very hard,”
Many businesses have increased Crown arrears at an alarming rate and HMRC has
realised there is a very large UK plc debt that needs to be paid.”
The Business Payment Support Service was already extensive when it kicked off
last November but its scope was expanded as economic conditions worsened. Today,
60% of the arrangements have a limit of three months, HMRC said, but new
applicants may find it harder to secure the arrangements. “Business owners
therefore have to submit a repayment plan that is spot on first time,” added
Heap. “Any plan must be workable, robust and deliverable.”
Despite the clampdown HMRC has vowed to keep the scheme going for as long as
is necessary. “HMRC will maintain the BPSS helpline for as long as there is need
to do so.”
IN OUR VIEW
HMRC is clearly doing the right thing, but there must come a time when
the taxman says enough is enough. Maintaining the delicate balance between
keeping companies afloat and getting them to pay their dues is a dilemma no one
Making Tax Digital will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs
MHA MacIntyre Hudson has partnered with cloud accounting software provider Xero ahead of the government’s requirement for digital records
The drive towards a fully digital tax regime is an admirable one, but mandation is simply wrong, according to one of the UK's most senior tax technology practitioners - Paul Aplin
Does Darwin's theory apply to taxation? Colin ponders...