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According to the latest industry research, HM Revenue and Customs (HMRC) is currently owed £1.6bn in late tax payments last year, with the figure expected to rise even further once more self-assessment returns for 2017/18 have been submitted.
Research by UHY Hacker Young, found that 681,000 people and companies have opted for ‘time to pay’ arrangements which have to be formally agreed with the tax authorities and allow for longer periods to pay tax due.
UHY Hacker Young said that the rise could also be linked to the number of self-employed people in the UK, many whom are filing self-assessment returns for the first time. March 2019 saw the record high of 4.93 million self-employed people in the UK.
The firm added that another reason for the surge in the number of taxpayers forced to ask to negotiate time to pay arrangements is HMRC’s loan charge, which in some instances has seen HMRC agreeing to payment plans of up to three years.
Neela Chauhan, a partner at UHY Hacker Young said: “The vast majority of taxpayers are fully intending to pay on time. However, they face a lose-lose scenario when they find it hard to do so.
“They could either choose to pay the full amount on time, risking the long-term health of their business or career because of the hit on their cash flow, or accept a potentially hefty fine further down the line.”
