The government’s scheme to help businesses that are struggling to pay their tax bills could see a rise in requests to delay payments as the self-assessment date approaches.
The Business Payment Support Service was set up by the Chancellor to allow businesses facing cashflow difficulties to negotiate a timetable for settling PAYE, corporation and income tax bills.
It was extended by Alistair Darling in his pre-Budget Report.
Anita Monteith from the tax faculty at the Institute of Chartered Accountants in England and Wales has said that the looming 31 January deadline for self-assessment tax returns could prompt an increase in the numbers of self-employed small business owners asking to use the time to pay scheme.
Ms Monteith said: “I am sure there will be greater demand for deferral this year than there was last year.”
As well as submitting self-assessment returns, many self-employed business owners will need to make two payments by 31 January – the final sum for the tax year 2008/09 and the first payment on account for 2009/10.
With a number of self-employed businesses using an accounting date of 30 April, some taxpayers could be handed tax charges on earnings in the year to April 2008, a period before the recession had yet to bite so hard.
The latest figures from HM Revenue and Customs (HMRC) revealed that, as of 17 January, some 160,000 businesses had been given permission to delay settling their tax bills under the BPSS scheme.
The total amount of deferred tax has now reached £4.6 billion of which £3.57 billion has been repaid. The majority of rescheduled payment agreements (60 per cent) are for three months or less.