Figures obtained by the insolvency trade body R3 show that HM Revenue & Customs could be facing a tax debt of up to £650 million, as businesses continue to struggle. The Time To Pay scheme was launched by HMRC to help businesses in times of financial difficulties, giving them extra time to pay their tax bills.
Latest figures show that there is almost £1bn left owing to the government as a result of the scheme. Some of the companies have had their tax debts rolled over four times, leaving £650 million of the £1bn debt still owing. According to the president of R3, Frances Coulson the TTP scheme played a vital role in the prevention of many companies going into liquidation. However, businesses that are on their fourth referral could be experiencing serious cash flow problems, which should act as a warning sign to HMRC. This indicates that the scheme is not operating the way it should be.
TTP was launched in November 2008 and has allowed companies extra time to pay £7.4bn, with more than 400,000 deals. If HMRC recalls the TTP arrangements, many of the companies who have had three or four referrals will struggle, possibly going into insolvency. HMRC say that the amount outstanding is collectible through the scheme or by normal debt collection procedures.
A spokesman for HMRC said:
“The majority of businesses that have entered into time to pay arrangements with us are fundamentally viable and are still in business in no small part due to the practical support provided by our time to pay arrangements.”
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