Overdue Corporation Tax up 15% to £1.82bn

A report from Funding Options found that the amount of overdue corporation tax for UK businesses increased 15% in the last year.

Total corporation tax has jumped to £1.82bn from £1.59bn in the last year, as businesses have struggled to pay their tax bills.

One of the cited reasons for this increase seems to be “Brexit” and the uncertainty surrounding its negotiations. Whilst some reports suggest orders and buying has been unaffected by the Brexit decisions, others have expressed concern that businesses could face growing pressure on cash flows.

HMRC continues to use aggressive methods to recover overdue tax, Funding Options explains, for businesses who have failed to pay their corporation tax bills on time. This has exacerbated the problem for many receiving late payment penalties, asset seizures and sending debt collectors to the premises.

Small businesses are expected to be at a higher risk of uncertainty from Brexit as the seizure of assets could see an increase reliance on overdrafts and alternate funding options. With overdrafts being cut by 37% over the last five years, the government has responded by introducing the Bank Referral Scheme to provide small businesses with the opportunity to source funding.

Whilst small businesses are encouraged to utilise the Bank Referral Scheme, there are warnings about securing loans greater than can be reasonably repaid. Figures from the R3 Press Office of Business Recovery and Restructuring have also found “Brexit” as a contributing factor for an increase in corporate insolvencies.