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Tax Debt Is Rising As Small Businesses Struggle To Pay

And business failure rates are increasing too ...


Posted by Helen Beaumont on 09/08/2023 @ 8:00AM

HMRC unveiled figures today showing an increase in unpaid tax, with the total reaching £44.5bn as of 30 June 2023. This marks a 6% growth in tax debt compared to last year on the same date ...

As the tax debt is rising, business failure rates are increasing too!

As the tax debt is rising, business failure rates are increasing too!

copyright: slasny / 123rf

Small and medium-sized businesses account for most of this outstanding tax, with many seeming to face difficulties with their own cashflow as inflation remains high. HMRC data indicates little change in the rate of taxpayers submitting their returns and stating their liabilities on time.

"However, there's been a decrease in
timely payments!"

At the close of June 2023, 892,673 taxpayers were involved in Time to Pay (TTP) agreements, a 5% increase from last year, though slightly below the 912,233 recorded at the end of March 2023.

The strain on cashflow is mirrored in a surge in business insolvencies. The latest numbers, for the quarter ending 30 June 2023, show the most significant tally of company insolvencies in nearly a decade and a half.

HMRC's performance statistics also reveal an uptick in civil compliance checks against taxpayers, with 77,000 new investigations in Q1 of 2023-24, marking a 28% increase year-on-year as post-pandemic compliance work intensifies.

I feel that these figures reveal a grim scenario for small businesses in the present economic climate. Those failing to pay on time could face escalating interest rates for overdue payments, currently at a 15-year peak of 7.5%, especially with the Bank of England's recent decision to elevate base rates.

HMRC has simplified the process for taxpayers with income tax, PAYE, and VAT debts to initiate Time to Pay arrangements via online tools. Expanding this to cover corporation tax and enhancing the monetary thresholds for self-arranged TTPs would be beneficial.

Nevertheless, HMRC must also confront those who can afford to pay, but are not doing so. The task ahead for HMRC is enormous.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about tax debt and how you can avoid it, it may be a great idea to give me a call on 01908 774323 and let's see how I can help.

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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.