More than one in four businesses that were allowed to defer tax payments during the spring lockdown last year still owe the Treasury billions.
A total of 156,500 out of 590,000 businesses that took advantage of Rishi Sunak’s VAT deferral between March and June have failed to make contact with HM Revenue and Customs (HMRC) to pay the money they owe, even though the deadline to repay it or arrange a repayment plan passed on June 30.
Figures supplied by the taxman show the amount of tax owed was £2.7 billion, 9 per cent of the total of VAT that was deferred, while £17.8 billion has already been paid and £13 billion is due through monthly instalments.
The numbers, quoted in this weekend’s Sunday Times following a freedom of information request to HMRC, will raise fears that the government will never recoup much of the coronavirus support and tax breaks handed out during the first lockdown, with some claimants going out of business and others being pursued by HMRC debt collectors.
The Treasury’s support schemes have also been targeted by fraudsters. HMRC has launched more than 12,000 fraud investigations into billions of pounds taken by businesses and workers in the furlough scheme for employed workers, self-employed income support scheme and the “eat out to help out” restaurant incentive from last summer, although many other businesses may have taken money they do not need without detection.
A spokesman for HMRC said: “HMRC will support any taxpayer in financial distress as a result of Covid-19 and any business that may struggle to pay its deferred VAT should contact us.
“Businesses had up to June 30 to make arrangements to pay deferred VAT, so those who failed to take action should contact HMRC to pay what they owe.
“They may be eligible to receive support with their tax affairs through HMRC’s ‘time to pay’ service.
“These arrangements are agreed on a case-by-case basis and tailored to individual circumstances and liabilities.”
If you would like to discuss your VAT arrangements or any other aspect of dealings with HMRC please contact your usual relationship partner or manager.