Don't Be Tempted to Ignore the Taxman
With more and more businesses finding day to day funding of their operations even harder, there may often be a temptation to “borrow” from HM Revenue & Customs.
And that is when firm’s can get into big trouble.
The Pre-Budget Report saw the introduction of a new HMRC Business Payment Support Service which will allow those in temporary financial difficulty to pay their tax bills on a timetable they can afford.
For years, compromises have regularly been reached on VAT and PAYE arrears, yet businesses have historically found it rather more difficult to agree a repayment schedule for corporation tax arrears.
But, with the Government recognising the difficulties that many otherwise healthy businesses are facing with cash flow, the new support line will cover all taxes.
This allows businesses to seek negotiated terms to allow them to meet arrears of tax through a payment strategy.
But, warns Mr Young, the onus is on the taxpayer to approach HMRC as soon as possible and discuss the issue.
Those that fail to co-operate are still likely to find themselves facing the wrath of the tax man.
Mr Young, who is also president of North Staffordshire Chamber of Commerce, said that to ignore HMRC when it came to payment of VAT, National Insurance and the like was an invitation for them to issue winding up proceedings.
“Talk to the tax man, agree a payment plan and stick to it,” said Mr Young. “Don’t stick your head in the sand.
“HMRC is in a special position where no tangible goods or services are being supplied to businesses, although regular monthly payments are part of daily life.
“But they still need to be paid.
“Being able to identify and quantify creditors is even more imperative in these trying times. In such cases, where a business is struggling to get a grip, HM Revenue & Customs can become an unwitting and unwilling lender.
“Moreover, businesses can fall into the trap of either delaying their payment or deliberately underpaying simply to overcome an immediate cash shortfall.”
Bob Young is senior partner at Begbies Traynor in Stoke-on-Trent, a fellow of the Insolvency Practitioners Association (FIPA) and a member of the Association of Business Recovery Professionals (MABRP) - and has over 30 years' experience of corporate rescue and recovery, turnaround and corporate and personal insolvency work. Formerly a partner in Poppleton & Appleby, a director of PricewaterhouseCoopers and Official Receiver in Birmingham, Bob has built up a substantial following in Staffordshire and beyond, and he chairs the North Staffordshire Chamber of Commerce Business & Finance Committee.