The number of companies that have taken up the government’s offer to defer tax payments has doubled in nine months with more than £5.2bn of tax now deferred under the scheme.
Since its launch in November 2008, the Business Payment Support Service (BPSS) has reached more than 300,000 “time to pay” agreements with more than 200,000 businesses, collectively employing more than 1.4m people.
The figures, published this week in HM Revenue & Customs’ (HMRC) annual report, support the view held by many business owners and accountants that BPSS has been among the government’s most successful stimulus measures in recent years.
However, they have also fuelled concerns that tax officials will have to become tougher on company owners seeking
further help with cash flow as the economy emerges from recession.
David Hudson, a partner with the restructuring and recovery team at the accountancy firm Baker Tilly, said HMRC might be offering business owners “false hope” that the taxman will deal leniently with their financial problems.
“The pressure is on the HMRC to assume a stronger role as a creditor and we expect that it will become far more selective over the businesses it supports, especially with those where there is a history of tax default,” he said. “The government is planning to reduce its massive debts and so HMRC is already assuming a much harder line.”
HMRC has denied it has been getting tougher with those seeking to defer tax, although it notes that more questions will be asked if company owners seek to use BPSS multiple times.
The tax office says that more than 90 per cent of what it had expected to receive has been paid and, by March 28, just under £4.2bn had been repaid, both in part and in full.
Get alerts on Entrepreneurship when a new story is published