Although HMRC’s crackdown on tax avoidance has been working effectively over the last couple of years, netting an additional £400 million in tax receipts in 2016 alone; the same success has proved to be elusive when it comes to corporation tax. The latest figures show that businesses across the UK now owe £1.8bn in late corporation tax payments, amounting to a 15 per cent increase year-on-year.
The latest figures come from new research conducted by Funding Options, one of three government recommended finance platforms for its bank referral scheme: Funding Options works with trusted advisors like accountants, finance professionals and trade federations in order to make it easier for SMEs to get access to finance. The bank referral scheme is specifically aimed at businesses who have been rejected for a loan by traditional high street banks, referring them instead to a panel of alternative funding sources.
Funding Options’ research shows that over the last 3 financial years overdue corporation tax owed to HM Revenue & Customs (HMRC) has increased from £1.52bn in 2014 to £1.59bn in 2015 before hitting a high of £1.8bn in 2016. Why are the numbers rising consistently? Well, in the opinion of
Conrad Ford, CEO, Funding Options, the figures suggest that SMEs are struggling, and are increasingly facing a growing strain on cash flows:
“We have seen an increasing number of companies come to us for funding in order to pay their overdue tax bills,” he said.
“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,” he added.
The Funding Options research suggests that it is the smaller companies who are struggling the most. It claims that small firms run the biggest risk of having to pay late penalties. In more severe cases, some SMEs will have their assets seized because of irregular cash flows, and that simply exacerbates the problem and increases the likelihood of smaller firms falling further behind on their tax payments.
Funding Options claims that smaller companies are now increasingly turning to alternative finance for a solution to their cash flow problems. The availability of options like invoice finance, peer-to-peer lending and crowdfunding are all potentially useful avenues for businesses to explore, rather than dipping into cash reserves or taking out business loans:
“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,” added Mr Ford.
If your business is having difficulty with corporation tax planning, the speak to Steven Glicher accountants. We can help you with all aspects of corporation tax compliance and planning. For further information about corporation tax, self-assessment or any other small business tax advice, please contact Steven Glicher on 0161 485 8007 or email email@example.com