Accounting firms requiring funding jumps 40% in a year
HMRC's winding down of Time to Pay could be pushing firms to take out loans, says Syscap
ACCOUNTANCY FIRMS that require funding to pay for tax bills have dramatically increased in the last year.
Practices that have requested funding has increased 40%, according to independent finance provider Syscap.
The company blames the increase on a 31 January deadline by which firms have to pay their previous year’s tax bill. They must pay their fourth quarter VAT bill by 7 February.
Syscap, which believes HM Revenue & Customs is winding down its tax deferral scheme Time to Pay, said this year it has seen a higher proportion of requests for loans below £1m.
Philip White, CEO of Syscap, said: “HMRC is under a lot of pressure to get the tax that they are owed in as quickly as possible. That means they have to put a lot of pressure on all businesses to pay their tax bill as quickly as possible.
“At the start of the recession accountancy firms were able to use the HMRC’s ‘Time to Pay’ process to defer tax payments that they couldn’t pay out of cash. Unfortunately, that scheme has been winding down.
“Even hugely profitable accountancy firms can find themselves short of cash – especially if customers are slow to pay. The result is we are seeing an ever-increasing demand from accountancy firms for a simple funding product to cover tax payments and protect precious cash and working capital.”
On 31 January all accountancy firms must make a payment on behalf of their previous year’s tax bill. Syscap said this year it has seen a higher proportion of requests for loans below £1m as the need for funding for small and mid-sized firms continues to grow.