October 13, 2009
Small Business Borrowers Struggle To Meet Taxes
Many small business are struggling to find the cash to pay their taxes as the recession continues to eat into their finances, according to a new report.
LC Corporate Strategies, a tax arrears specialist, says it is fielding a record number of enquiries from cash-strapped businesses wanting to reschedule payments to the taxman – it says in the last year it has had more than 100 requests for help from Small and Medium-sized Enterprises needing to use HM Revenue and Customs' Time To Pay Arrangement Scheme to spread tax payments.
The scheme allows firms to spread the payment of tax liabilities after agreement with HMRC for all types of tax liabilities including corporation tax, income tax, VAT and PAYE.
But between November 2008 and August 2009, HMRC says it has arranged deals for 177,000 firms – approximately £3bn had been deferred as of August. Worryingly, £1.1bn of that sum now needs to be repaid, according to LC Corporate Strategies.
Rik Heap, director at Corporate Strategies, says it is essential for directors to act as soon as they become aware of a problem with tax payments – because ignoring demands for payment from HMRC won't make them go away.
He says: "It's very difficult to help if we're contacted by a director on the day before a business receives a winding-up petition. Doing nothing really is not an option. It's crucial for directors to move immediately if they're having issues with their tax – it allows them to retain control of their finances and ensure the security of the business."
If you find that you can't afford your taxes, you need to talk to a professional adviser who can help you rearrange your finances and see where you can afford to make cuts. Taxes will never go away, and they have to be treated with the same respect as you would any other financial responsibility. So make sure you can cover all your debts, including your taxes, otherwise your small business could be at risk.
SOURCE: LC Corporate Strategies, 02/10/09, HMRC, August 2009
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