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Wednesday, 15 April 2009

Time to Pay PAYE, NIC, Corporation Tax or VAT; 106,000 take advantage.

Over 106,000 firms have taken advantage of the Governments offer to spread payments of PAYE, NIC and VAT over considerable periods of time. Over £1.8billion has been deferred.

In London, the number of companies taking advantage of the scheme has now reached nearly 12,000.

Many of these will benefit from the short term cashflow fix that deferring tax can bring. But being a cynic I would suggest that many are simply clinging on for dear life and not actually taking steps to fundamentally restructure their distressed and INSOLVENT business.

Insolvent? Well yes failure to pay creditors as an when they fall due, is a test for insolvency. See here for the three tests to work out Is my Company Insolvent?

So, spread tax payments out if you can, but also look at the costs of the business. Assess sales and margins, calculate "what if" scenarios, for example what if your top 5 customers all delayed orders for 2 weeks, or more pertinently delayed paying for 4 weeks?

Simply deferring tax is not enough, although 106,000 companies may think it is?

If you need help to ask for time to pay see out Time to Pay Programmes here.

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