Over 550,000 SMEs struggle to pay tax bills, study finds
The average value of the bill they struggled to pay was more than £45k, but 10% reported having problems with bills of more than £100k
More than 550,000 small and medium-sized businesses are currently struggling to pay tax bills, according to new research from Premium Credit.
The study that was carried out by the provider of finance for companies found that the rising cost-of-living is adding to the pressure, yet issues with tax have been a long-standing problem for companies across the country.
Roughly 10% of the UK’s 5.5 million SMEs said they are struggling to pay tax bills, while up to 15% said they had issues paying them in the past 10 years.
The average value of the bill they struggled to pay was more than £45k, but 10% reported having problems with bills of more than £100k.
The research also found that tax problems could get worse, as around a fifth of SMEs said that affording tax bills has become more difficult due to the cost-of-living crisis.
Meanwhile, more than a quarter said that it is likely they will struggle to pay one or more tax bills in the next five years.
Corporation tax is the bill firms are currently struggling to pay, with 54% of those with problems paying tax say their issue is with corporation tax. Another 35% said they have issues with VAT.
In addition, the research found that among firms who are struggling to pay bills, 24% could dismiss staff, while 30% will consider raising funds from existing investors and 26% could look for new investors for the business.
Approximately 29% think they will look to agree a payment plan with HMRC, while 21% may turn to borrowing from family and friends.
Jennie Hill, chief commercial officer at Premium Credit Specialist Lending, said: “SME finances are inevitably under pressure from the cost of living crisis and that has an impact on their ability to meet tax obligations but paying tax bills is a long-standing issue for companies and is certain to remain so.
“Failing to pay bills on time will lead to fines from HMRC so any company which is struggling should consider spreading the cost for up to a year to pay bills on time and improve cash flow when it is needed.”