Outstanding VAT owed to HMRC continues to rise
UK businesses owed £3 Billion in outstanding VAT to HMRC during the 2017‐2018 financial year, according to new figures from Funding Options.
The business finance provider found that unpaid VAT is at a five‐year high, while levels of non‐ payment for corporation tax have risen year‐on‐year for the last five years.
Funding Options has warned that debtors could be driven out of business if they do not take action to address the finances they owe.
HMRC has a number of sanctions that it can impose on businesses when trying to chase money owed, ranging from disqualifying directors to issuing winding up petitions.
However, a variety of time to pay services can help businesses that are unable to meet their liabilities, by providing assistance with VAT and PAYE arrears, unpaid tax, the threat of bailiffs and unfair penalties that can be imposed.
Late payments are one issue thought to be behind the rise in tax and VAT that is owed to HMRC, as larger firms often fail to pay smaller suppliers on time.
This has a knock‐on impact on the supply chain, as the smaller firms then lack the cash flow to meet their own liabilities.
Overall, the level of outstanding VAT has jumped by 22%, yet Funding Options also suggest that the complexities of the tax system itself can present problems for smaller businesses.
The amount of corporation tax owed to HMRC has climbed by £0.1 billion every year from 2013, reaching a high of £2 billion in the latest figures.
Throughout 2018, the Federation of Small Businesses has warned that late payments are driving a rise in insolvency cases.
Back in March, FSB chair Mike Cherry suggested that as many as 50,000 small firms have shut up shop as a result of late payments, while more than eight in ten small businesses reported that they were paid late.
Businesses experiencing financial issues are encouraged to seek appropriate advice at the earliest opportunity, as acting quickly significantly enhances the number of insolvency and restructuring solutions than can be used.
By Phil Smith
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