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Time to pay spikes during pandemic

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667 large businesses have been forced to defer tax payments worth over £750,000 during lockdown, say accountants and business advisors, Moore, with 100 large businesses agreeing time to pay arrangements with HMRC in June alone. Chris Tate, director at Moore, points out that although the ability to reschedule payments helped free up cash for businesses at a critical time, ‘these payments have not gone away, they have simply been deferred. Businesses in time to pay arrangements need to be thinking about how they will repay HMRC.’

Tate also notes potential problems later this year, with the reintroduction of HMRC’s preferential creditor status from 1 December, meaning that HMRC will be paid ahead of most other lenders and suppliers in an insolvency event. ‘HMRC’s reintroduction as a preferential creditor is bad news for suppliers. In some cases of insolvency, the chances of suppliers being repaid what they are owed could be slim, so it is essential that they prepare for this outcome.’ This risk of not being repaid could also result in lenders being reluctant to provide funds to businesses which are in time to pay arrangements.

Issue: 1506
Categories: News