Fears have been raised that struggling firms in the region could be tipped over the edge into insolvency amid a continuing fall in the numbers being allowed to defer tax payments.
Figures from HM Revenue and Customs show that in the six months to the end of July, 4,370 business were allowed to defer tax to the value of £77m under the Time to Pay scheme, including 640 inNorfolk, 510 inSuffolkand 430 in Cambridgeshire.
The business payment support service is designed to meet the needs of all businesses and individuals who are experiencing difficulties in paying the tax due in full and on time. Since the scheme started in November 2008, a total of 41,400 Time to Pay agreements have been made in the region, with a total value of £690m. However, the number and the value of arrangements have been falling with 13,100 last year and 23,600 in 2009.
Chris Williams, a partner for Norwich-based insolvency experts McTear Williams & Wood, and spokesman for R3, the trade body for insolvency professionals, said: “The Time to Pay scheme has, in many cases, provided a valuable breathing space for struggling companies, though it has also been responsible for keeping a lot of zombie businesses artificially alive.
“The continued decline in the number and value of arrangements shows that the taxman is now taking a much tougher stance.
“This is backed up by the recent sharp rise in company liquidations, which indicates that HMRC is now stepping in to wind up companies which have continually defaulted on tax payments, or late payers without agreements in place.
“Companies with cash flow problems should be aware they can no longer rely on deferring their tax bill as a survival strategy, but must seek professional advice to get their affairs in order.”
Mr Williams also criticised a decision not stop releasing the Time to Pay figures. Maddy Ratnett from HM Revenue & Customs (HMRC) said: “We remain committed to doing everything we can to support viable businesses going through short term cash flow difficulties via time to pay arrangements.
“However, there is little HMRC can do for a business whose viability is dependent on not paying the UK taxes to which they are liable, or on special treatment not available to other customers with similar tax affairs.”
Eastern Daily Press
25 August 2011