Credit, collections & insolvency news
Nearly one in 12 SMEs, around 440,000 firms, say they have missed tax payment deadlines in the past year with a third of them admitting to missing five or more, new research from Premium Credit.
The study with SME owners and managers found 8% of the UK’s 5.55 million SMEs have missed tax payment deadlines for Corporation Tax, VAT and other taxes and shows companies are increasingly looking for alternative solutions to help meet these costs.
SMEs are split over whether HMRC has toughened its stance to tax arrears and deadlines recently – 18% believe it has while 19% say it has become more understanding. Around a third (32%) say there has been no change while 31% did not express a view.
Tax worries are rising with around 388,000 say they have used HMRC’s Time to Pay (TTP) scheme, which enables eligible business to pay Corporation Tax arrears usually within three to six months, during the last five years. Around one in eight (12%) say they may use the TTP scheme within the next three years.
Missing 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 late.
The research however shows consequences can be much worse, around 11% of the SME managers and owners questioned say they have worked for firms which went out of business because they could not pay tax bills.
Around 390,000 said there was a risk their current firm could go under in the next five years over tax issues while a similar number say they have in the past worked for firms where HMRC has sent enforcement officers or bailiffs to identify goods for seizure to meet tax bills.
Jennie Hill, Chief Commercial Officer, Premium Credit (Specialist Lending) said “SMEs are clearly feeling the strain on tax bills with large numbers admitting to missing deadlines and others looking to clear arrears over three to six months through HMRC’s TTP scheme.”
