More than 550K SME's Are Struggling To Pay Tax Bills
New research from Premium Credit shows more than 550,000 SMEs are currently struggling to pay tax bills with Corporation Tax and VAT top of the agenda.
The study by the leading provider of finance for companies’ tax bills with SME owners and managers found the rising cost of living is adding to the pressure but issues with tax are a long-standing problem for companies across the country.
Around 10% of UK’s 5.5 million SMEs say they are struggling to pay tax bills while up to 15% say they have had issues paying them in the past 10 years. The average value of the bill they struggled to pay was more than £45,600 but 10% had problems with bills of more than £100,000.
Tax problems could be set to get worse, the research found. Around a fifth of SMEs (19%) say affording tax bills has become more difficult because of the cost of living crisis and more than a quarter (26%) say it is likely they will struggle to pay one or more tax bills in the next five years.
Corporation tax is the bill firms are currently struggling to pay – more than half (54%) of those with problems paying tax say their issue is with Corporation Tax while 35% say they have issues with VAT.
Premium Credit’s Tax and VAT funding proposition, which allows companies and business owners to spread the cost of their VAT, corporation tax and self-assessment tax payments for up to a year, saw a 68% rise last year in the amount it lent to fund VAT bills and a 53% increase in the amount lent for non-VAT bills.
Jennie Hill, Chief Commercial Officer, Premium Credit (Specialist Lending) said:
“SME finances are inevitably under pressure from the cost of living crisis and that has an impact on their ability to meet tax obligations but paying tax bills is a long-standing issue for companies and is certain to remain so."
“Failing to pay bills on time will lead to fines from HMRC so any company which is struggling should consider spreading the cost for up to a year which for a small fee will help them to pay bills on time and improve cashflow when it is needed.”
The research found that among firms who are struggling to pay bills nearly a quarter (24%) could layoff staff while 30% will consider raising funds from existing investors and 26% could look for new investors for the business. Around 29% think they will look to agree a payment plan with HMRC while 21% may borrow from family or friends.