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14-06-2011

The taxman could be facing a loss of up to £650m in tax debts it allowed to build up as part of arrangements to tide businesses over during the recession.

New figures show there is just under £1bn outstanding as part of the government's "Time to Pay" arrangements. The scheme enabled HM Revenue & Customs to strike deals with struggling businesses to give them longer than usual to pay their tax bills.

Of that £1bn, £650m has not been paid as initially agreed by HMRC with the businesses concerned. The figures were obtained by R3, the insolvency trade body. It is understood that some businesses have seen their HMRC debts effectively rolled over four times, R3 said.

Frances Coulson, R3's president, said: "Time to Pay has played a vital role in preventing the spike in corporate insolvency numbers that usually follow the end of a recession, but these figures give rise to serious concerns about the way the scheme is operating.

"Time to Pay should be used as breathing space for businesses undergoing temporary difficulty. However, if a business is on their third or fourth referral, that should act as a warning sign; it indicates that there are underlying problems with its cash flow. It should make HMRC question the financial viability of that business."

TESTIMONIALS

Standout firm known for its personal insolvency work for clients including private companies, individuals and governmental institutions. Frequently acts for insolvency practitioners, assisting with the realisation of assets, both in the UK and abroad.

Chambers and Partners

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