HMRC claim small businesses owe £14bn in taxes.
2 July 2019: We last reported that the government is proposing a two month breathing space to struggling debtors. It has now also been reported that small businesses owe HMRC £14bn in taxes. The amount of uncollected tax has hit £35bn, with small businesses accounting for the largest percentage of the tax gap at £14bn while VAT evasion remains a major drain on tax revenues.
Large businesses were responsible for a further £7.7bn with £4.9bn for mid-sized businesses. Individuals were only responsible for £3.9bn.
Small businesses account for 40% of the tax gap with £14bn in unpaid tax for reasons of failure to take reasonable care, legal interpretation or errors. Of the total £600,000 was for nonpayment of PAYE tax, with 13% of small businesses failing to comply with PAYE rules.
We find that companies that are stretched for cash put suppliers and employees before their tax liabilities. Where a company is financially struggling, it is important to keep in touch with HMRC. HMRC may agree to a time to pay agreement where short term cash flow budgeting will assist the business get back on track.
BRI’s team of experts deal daily with such financial constraints, assist businesses with negotiations and look at business recovery options where HMRC refused to agree to informal time to pay agreements.