“Small businesses are crying out for support following the collapse of Carillion,” said Zoe Thomas, business tax partner at Smith & Williamson.
“HMRC should allow those businesses lee-way on key taxes owed following the collapse. VAT and corporate tax payments are due regularly but if HMRC was to engage in discussion to delay these payments, immediately, it could offer small businesses the lifeline they need while trying to stay on their feet.
“A small extension on time to pay, without penalties, could make a massive difference to all those involved.”
A recent survey run by Smith & Williamson pinpointed belief in government support reached a record low with only 28% of respondents [out of over 200 leading SMEs and entrepreneurs] believing that the government had their best interests at heart.
“The amounts received from the small businesses are relatively inconsequential to the treasury but to those involved it could be the difference between a business being at the brink and from complete collapse. Should the government intervene it would demonstrate a supportive government and hopefully ensure the survival of hundreds of small businesses.”
HMRC should follow the banks' lead
A recent statement from UK Finance highlighted that, where appropriate, banks would put in place emergency measures, including overdraft extensions, payment holidays and fee waivers to ensure those facing short term issues can be helped to stay on track.
“This is exactly the kind of strong statement HMRC needs to make, to ensure that small businesses retain confidence in the support they need. “A recent statement reminded people of the potential for support and what the service can do. However, it did not go far enough and explicitly state, for example, that VAT payments would be delayed.”
The statement said:
'The Business Payment Support Service can:
- agree instalment arrangements if you’re unable to pay your tax on time following the Carillion collapse
- suspend any debt collection proceedings
- review penalties for missing statutory deadlines
- reduce any payments on account
- agree to defer payments due to short-term cash flow difficulties'
Zoe Thomas commented: “This is a fast moving situation and SMEs need security. If HMRC can confirm key details, such as a three month delay on VAT and corporation tax payments, then business owners can move on to saving their business for the benefit of the entire economy.”
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.