Firms 'could be in trouble' as tax delay scheme expires

Date: 17th September 2009

As many as 200,000 British businesses have signed up to HM Revenue & Customs' (HMRC) 'time to pay' scheme, enabling them to delay their tax bills.

Figures released by the government department to the Daily Mail show that some £3.6 billion worth of tax money has been placed on hold as businesses of all sizes struggle to cope in the tough economic climate.

And while this scheme, which is currently being taken advantage of by 23,000 London businesses and 22,500 enterprises in the north-west of England, offers companies some breathing space over the short-term, some observers have claimed that it could cause long-term damage to those already struggling financially.

The president of the insolvency trade body R3, Peter Sargent, told the paper: "If a company's underlying problems are not resolved there could be an upturn in the number of corporate insolvencies when these agreements run out."

Earlier this month, the Confederation of British Industry (CBI) argued that the government needs to make changes to existing tax structures so as to make the UK more attractive for innovative companies.