Rise in accountants and financial advisers’ clients struggling with tax bills

Accountants and financial advisers are increasingly seeing clients struggling to pay tax bills, with the average bill they are struggling to pay coming in at £120,000, according to research from Premium Credit.

The study found almost all (94%) accountants and financial advisers who advise on tax have seen a rise in clients struggling to pay tax bills in the past 12 months, with more than six out of 10 (61%) reporting an increase of 10% or more in the number of clients struggling with tax bills.

Trouble paying income tax bills saw the biggest increase, identified by 70% of those questioned. However 40% have seen a rise in clients struggling to pay VAT and 39% a rise in clients struggling to pay Corporation Tax.  On average 13% of accountants’ and financial advisers’ clients are struggling with tax bills.

Tax rises and planned tax rises are cited by 50% of accountants and financial advisers as the main reasons why clients are struggling to pay their tax bills followed by 43% who say clients’ profit margins have suffered.

The research found accountants and financial advisers expect growing use of HMRC’s Time to Pay (TTP) scheme which allows eligible businesses extra time to repay tax arrears usually over a period of three to six months. They also expect a rise in HMRC’s use of bailiffs.

Currently just a quarter (25%) of accountants and financial advisers say 5% or more of their clients use TTP but within three years nearly two out of three (63%) expect 5% or more of clients to be using TTP.

Jennie Hill, Chief Commercial Officer, Premium Credit (Specialist Finance) said: “Almost all the accountants and financial advisers in our research are seeing an increase in clients struggling with tax bills and the average bill is substantial. Accountants and financial advisers need to engage with clients facing tax problems and offer them practical solutions.”