Pictured above: Martin Coyne, partner at Poppleton and
Appleby
Business owners have been warned to keep on top of tax payments
after tax bills were highlighted as one of the biggest killers of
small to medium sized businesses.
Birmingham and Coventry-based insolvency firm Poppleton and
Appleby has revealed that in the overwhelming majority of cases
where businesses have become insolvent HM Revenue and Customs is
listed as the main creditor.
The problem has been heightened by the fact HM Revenue and
Customs is rejecting an increasing number of Time to Pay (TTP)
arrangements - traditionally used to give businesses leeway if they
fall behind on quarterly tax payments.
A total of 3,390 TTP requests were refused in the first three
months of 2011, in comparison to 2,440 in the same period in 2009
and 2,360 in 2010. The number of requests agreed has dropped
dramatically, with 32,900 agreed in the first quarter of this year,
compared with 82,000 in 2009 and 57,800 in 2010.
Martin Coyne, partner at Poppleton and Appleby, believed the
reason for the increased number of refusals was due to HM Revenue
and Customs taking a tougher approach.
"These arrangements were initially promoted during the recession
as a way of helping businesses through the tough economic
times.
"However, HM Revenue and Customs is now taking a tougher stance
with the view that businesses should pay their tax in full and on
time.
"It appears the majority of businesses which are being turned
down for TTP arrangements are organisations which have previously
applied - so the warning is not to assume you will be granted a TTP
arrangement just because you have had one in the past."
Another factor leading to the demise of many businesses is the
failure to react to potential problems with tax payments at the
earliest opportunity.
"We have certainly had instances where people have come to us
far too late in the day but if they had approached us earlier we
would certainly have been able to help them avoid liquidation.
"There are a number of options available to companies struggling
with tax payments including potential refinancing of the business
and we have also found that organisations like ours are often in a
better position to agree TTP arrangements on behalf of
companies.
"Our advice would be to seek expert guidance and advice at the
very first sign of trouble."