Increasingly important to stay on top of tax bills as HMRC now less likely to give ‘time to pay’
The total value of Corporation tax payments in arrears has hit £1.59 billion this year*, up from £1.52 billion at the same point a year ago, despite an improving economic climate say LDF, a leading finance provider.
LDF explain that as the economy recovers, many businesses are now looking to increase capacity and counter underinvestment during the recession with higher spend on staff, equipment and infrastructure.
Research also indicates that the value of VAT payments in arrears has also risen, reaching £2.58 billion in 2015*, up from £2.55 billion the year before.
LDF highlight that it is increasingly important for businesses to stay on top of tax payments. Businesses can no longer rely on HMRCs ‘time to pay’ scheme as they may have done pre-recession, making it vital to have a suitable solution in place to cover this.
LDF say that the figures reflect the need for businesses to secure the right funding for their needs, enabling them to meet tax bills on time and to help support growth plans.
Peter Alderson, Managing Director at LDF comments:
“Investing money into business development need not impact a companies’ ability to cover essential expenditure.
“It takes a while for capital expenditure to translate into profit meaning some businesses will be experiencing pressure on cashflow. Whilst dipping into funds set aside to cover tax bills can be an attractive short-term fix – this can cause issues later on.”
There are however, simple steps businesses can take to ensure they keep up-to-date with corporation tax payments.
Peter Alderson explains: “Companies need to keep careful track of capital expenditure, ensuring it is timed and structured to allow the maximum amount to be claimed back. It is also essential to understand investment allowances available to your sector- and stay on top of any changes to the limits.
“LDF have seen a growing trend in businesses considering finance to cover Corporation tax bills. Our specialised finance arrangement allows the cost to be spread over a more manageable period of 6, 10 or 12 months, giving business-owners added peace of mind that finance is available, whilst also freeing up capital for investment in strategic business development.”
*Figure at 31 March 2015