More than one in four businesses that deferred tax payments during the initial lockdown last year still owe the HMRC.
A total of 156,500 out of 590,000 businesses that utilised the Government’s VAT deferral between March and June have failed to make contact with HMRC to pay what they owe, even though the deadline to repay it or arrange a repayment plan passed on 30th June.
Figures released by HMRC in response to a freedom of information request have revealed that the amount of tax owed is £2.7 billion, nine per cent of the total of VAT that was deferred, while £17.8 billion has already been paid and £13 billion is due through monthly instalments.
It is expected that the figures will heighten concerns that the Government will never recover the majority of the coronavirus support and tax breaks distributed during the first lockdown, with some claimants going out of business.
HMRC has said that businesses that do not contact the tax authority to arrange VAT payment plans will face penalties of five per cent of the money owed, plus interest.
Data published by HMRC last week revealed that it initiated 102,000 investigations into taxpayers suspected of tax evasion and avoidance in the first quarter of this year, up 36 per cent from the 75,000 launched in the previous quarter.
A spokesman for HMRC said “HMRC will support any taxpayer in financial distress as a result of Covid-19 and any business that may struggle to pay its deferred VAT should contact us. Businesses had up to 30th June to make arrangements to pay deferred VAT, so those who failed to take action should contact HMRC to pay what they owe. They may be eligible to receive support with their tax affairs through HMRC’s ‘time to pay’ service.”
“These arrangements are agreed on a case-by-case basis and tailored to individual circumstances and liabilities.”