Accountants pinpoint client struggles with tax payments.

TLDR:

Accountants and financial advisers have identified key reasons why clients are struggling to pay tax bills, including the cost of living crisis, falling revenue, and personal circumstances like divorce. Premium Credit’s research shows a growing concern among professionals, with many clients facing overdue tax bills and potential HMRC enforcement. The Time to Pay scheme offers businesses extra time to repay tax arrears, and Premium Credit’s Tax and VAT funding proposition allows for spreading tax payments over a year. The company saw an increase in clients using this service and the average size of loans to pay tax bills.

Summary:

In a study conducted by Premium Credit, it was found that 54% of accountants and financial advisers attribute clients struggling to pay tax bills to the cost of living crisis, followed by falling revenue (50%) and personal circumstances such as divorce (49%). Accountants also cited reasons like change in employment (45%), wage inflation for staff (42%), falling profit margins (37%), and increased costs of supplies (23%). The research indicates a growing concern among professionals regarding clients’ tax payment challenges. When companies face difficulties paying their corporation tax, HMRC may send enforcement officers or offer them extra time through the Time to Pay (TTP) scheme.

One-third of professionals surveyed by Premium Credit reported having clients on the TTP scheme, with an expected increase in the future. Premium Credit’s Tax and VAT funding proposition allows spreading tax payments over a year, with an increase in the number of clients using the service and the average loan size to pay VAT and non-VAT tax bills. The company’s research highlights the importance of early engagement with advisers to review options for spreading the cost of tax payments.