Corporation tax arrears up 18% to £1.8bn
Businesses owe £1.8bn in late corporate tax payments, a 15% increase over the past year, according to research by online business finance supermarket Funding Options, which warns arrears could rise further if Brexit uncertainty causes the economy to slow down
19 Dec 2016
Figures show overdue corporation tax due to HMRC stood at £1.52bn in 2014, rising to £1.59bn in 2015 before hitting £1.8bn this year.
Conrad Ford, CEO of Funding Options, said: ‘We have seen an increasing number of companies come to us for funding in order to pay their overdue tax bills.
‘These figures demonstrate the growing pressure on cash flow for companies, which could get worse following the outcome of the EU referendum. Companies might want to explore in detail alternative finance options available to them before HMRC comes knocking on their door.’
Funding Options says that small businesses are at particular risk of having to pay late penalties or even having their assets seized because of volatile cash flows, making it more likely that they fall behind on tax payments.
These smaller companies, who would typically rely on bank overdrafts to bridge shortfalls in cash flows, have had those overdrafts cut by £5bn – 37% of the total – over the last five years, affecting their ability to pay their tax bills on time.
Funding Options says that smaller companies are increasingly using alternative finance to avoid a crunch point in their cash flow when paying tax bills. Invoice finance, p2p lending, and crowdfunding are all possible options available to protect against having to dip into cash or loan facilities allocated for other areas of the business.
Ford said: ‘Businesses need to make sure they have the adequate funding to pay tax bills on time, without taking capital from other areas of the business.’
Funding Options is one of three designated finance platforms to have been included in the government’s bank referral scheme, aimed at making it easier for small businesses to receive funding. As part of this scheme, banks are required to offer any small business whose loan application they have rejected a referral to a panel of alternative sources.