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Wednesday
Jul292009

Pay-as-you-go tax lifeline helps 177,000 businesses

More than 177,000 businesses had cash flow problems eased by the taxman putting off payment of more than £3 billion in taxes under agreements made since April’s Budget.

The tax deferment scheme is aimed at helping businesses with cash flow problems by accepting tax payments in affordable bites rather than lump sums. Of the £3.17 billion deferred, £2 billion has been repaid and the total outstanding is not increasing.

HM Revenue and Customs issued a statement this week saying 90% of agreed payments has been received.

That leaves a 10% default – equivalent to £200 million.

Of the £3.17 billion deferred,  £320 million consists of repeat deferrals. Around 60% of deferrals are for three months or less.

The payment service arranges deferrals of PAYE, VAT, national insurance and corporation tax.

Businesses can access the service if they are 'genuinely unable to pay' and if the tax they owe is on the previous year's profits or if a trading loss in the current year is a high probability.

Effectively, the pay-as-you-go tax scheme is taking the place of traditional bank overdrafts – which is one of the reasons why Chancellor Alistair Darling called in bank chiefs to explain their small business lending strategy.

From analysing bank lending figures, it would seem the only credit line thrown out to small business is via government backed loans, while at the same time they squeezing overdrafts and increasing lending costs to protect themselves at the expense of customers.

With billions of taxpayers’ cash shoring up the banks, it seems selfish that they are taking no action to support the people keeping their businesses going.

If your business needs cash flow assistance, contact the HMRC Business Payment Support Line on 0845 302 1435

In most cases HMRC promises a decision in about 10 minutes.

For larger or more complicated payment debts HMRC might need a more detailed discussion before finalising payment arrangements.

If you call the hotline, have the following have the following information to hand:

    * Your tax reference number

    * Details of the tax that you are or will have trouble paying

    * Basic details of your businesses income and outgoings

 



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