Small and medium-sized enterprises (SMEs) are being warned of the dangers of falling behind on their corporation tax payments, after a new study found that the total value of payments in arrears now sits at around £1.82billion.
Last year, the total figure was £1.59bn in comparison – representative of a rise of 15 per cent in the last 12 months.
The data suggests that an increasing number of small and medium-sized enterprises (SMEs) are finding it difficult to pay their tax bills.
Experts have warned that firms could be targeted by HM Revenue & Customs (HMRC) with late payment penalties and asset seizures, should they fall behind on their payments.
Furthermore, separate studies suggest that businesses at the smaller end of the scale are the most at risk of falling behind – due to volatile cash flows.
Research carried out by Bacs found that the average SME’s late payment debt now stands at approximately £32,000 – and that almost half of Britain’s small businesses are being paid late – which is likely to have a direct impact on their ability to make tax payments on time.
Smaller firms will often rely on bank overdrafts to address shortfalls in cash flows, but reports suggest that such overdrafts have been cut by as much as 37 per cent over the last five years.