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Accountants and financial advisers are increasingly seeing clients struggle to pay tax bills, with the average amount owed reaching £120,000, according to new research from finance provider Premium Credit.
The study found that 94% of advisers who provide tax support had seen a rise in the number of clients unable to meet their tax liabilities over the past year. Of those, 61% reported an increase of 10% or more in struggling clients.
Income tax bills accounted for the biggest rise in difficulties, noted by 70% of respondents. A further 40% reported more clients unable to pay VAT, while 39% cited issues with Corporation Tax. On average, 13% of clients were struggling with tax payments.
Tax increases and planned rises were the most commonly cited reasons, mentioned by 50% of advisers.
Profit margin pressures were cited by 43%. Last year, 54% of respondents pointed to the cost of living as the main cause, compared with just 30% this year.
The research suggests growing use of HM Revenue and Customs’ Time to Pay (TTP) scheme, which allows businesses to spread tax arrears over three to six months.
At present, only 25% of advisers say more than 5% of their clients are using the scheme. However, 63% expect that figure to rise within three years.
Use of enforcement measures is also expected to increase. Four out of five advisers (81%) anticipate a rise in clients facing visits from HMRC bailiffs to seize goods for unpaid Corporation Tax, with 19% predicting a sharp increase.
Additionally, the study found that 94% of advisers believe clients would consider services allowing them to spread tax payments for a fee, regardless of whether they are currently in financial difficulty.
Jennie Hill, chief commercial officer for specialist finance at Premium Credit, said: “Almost all the accountants and financial advisers in our research are seeing an increase in clients struggling with tax bills and the average bill is substantial.
“Accountants and financial advisers need to engage with clients facing tax problems and offer them practical solutions such as spreading the cost into convenient monthly payments.”
