Nearly 500,000 SMEs say they have missed tax payment deadlines in the past three years with 19% of them admitting to missing five or more in the past 12 months, according to new research Premium Credit.
The study with SME owners and managers found 9% of the UK’s 5.487 million SMEs have missed tax payment deadlines for Corporation Tax, VAT and other taxes in the past three years as well as further evidence of the need for solutions to help SMEs pay tax bills on time.
Around one in eight (12%) say they may use HMRC’s Time to Pay (TTP) scheme, which enables eligible business to pay Corporation Tax arrears usually within three to six months, in the next three years.
Premium Credit, which provides a Tax and VAT funding proposition allowing companies and business owners to spread the cost of their VAT, Corporation Tax and self-assessment tax payments for up to a year, has seen the number of customers using it more than double in the past two years.
Missing tax payment deadlines can be expensive – penalties and fines range from £100 for being a day late with a Corporation Tax payment to as much as 15% of the amount of VAT not paid on time. Fines for paying VAT late start after payment is 15 days overdue.
Nearly one in ten (9%) SME owners and managers questioned say they have worked for a company which closed down because it could not pay its tax bills and around 380,000 (7%) say there is a risk their current firm would be forced out of business in the next five years over tax bills.
SME owners and managers are split over whether HMRC is getting tougher on tax arrears and debts – around 20% say it is while 23% say it has become more supportive. Around a third (30%) said there had been no change while 27% did not express a view.
Research last year found 18% believed HMRC had got tougher while 19% said it had become more understanding. Around a third (32%) said there had been no change and 31% did not express a view.
Jennie Hill, Chief Commercial Officer, Premium Credit (Specialist Finance) said “The number of SMEs missing tax deadlines is worrying, and the fines they face will simply add to their problems by further restricting cashflow.
“Spreading the cost of tax bills over a year for a small fee can help companies to plan more efficiently and avoid any risk of fines or penalties which can be crippling for a business that is already struggling to meet its tax obligations.”