Taxman takes tougher line on VAT payments


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	News 17-May-10 Taxman takes tougher line on VAT payments The taxman turned down requests from struggling businesses to defer VAT payments of more than £42 million in the first quarter of this year. The figure represents 11.2 per cent of the total amount businesses asked to delay paying — more than double the percentage refused in the same period last year. In the first three months of last year HM Revenue & Customs turned down only 5 per cent of requests — £44 million of the £824 million requested. The disclosure has raised fears that HMRC is getting tougher on businesses struggling to pay tax bills at a time when they are finding it difficult to gain bank credit. Under the Business Payment Support Service, set up two years ago, companies can request extra time to pay corporation tax, VAT and national insurance. Philip White, chief executive of Syscap, the IT finance provider that obtained the data from a Freedom of Information request, said that small and medium-sized businesses were finding it hard to borrow money, “so news that the HMRC refusal rate has shot up is worrying”. Bank of England data out last week showed that the gauge of bank lending to businesses hit a record low in March. Businesses are liable to pay VAT from the date they submit their invoices, which can leave them in difficulties if the customer is late in paying or goes under. Mr White said: “Figures showing GDP growth of 0.2 per cent show the economy is weak. More needs to be done to help, not less.” The VAT data comes a month after HMRC introduced rules under which all companies requesting to delay payments of more than £1 million under Time to Pay must undergo an “independent business review” by an approved accountant, which could cost a business tens of thousands of pounds. About 200,000 businesses have deferred more than £5 billion in tax payments since the scheme started. HMRC said that it had not tightened the eligibility criteria for Time to Pay arrangements, adding that each request was considered on its own merits. www.timesonline.co.uk Back to News