Traders’ unpaid VAT and corporation tax bills soar
A five-year high in unpaid VAT has coincided with unpaid corporation tax surging every year over the same half-a-decade period, a business finance provider says.
Disclosing figures that appear to raise questions about HMRC’s collection teams, Funding Options (FO) said outstanding VAT hit £3billion in 2017/18, up from £2.5bn in 2013/14.
Over the same five-year period, outstanding corporation tax has increased year-on-year from a low of £1.52bn to almost £2bn in the last tax year for which figures are available, FO says.
But quite apart from being a blight on HMRC’s record, the growing amount of corporation tax and the record VAT both being owed, but uncollected, was said to be an issue for debtors.
“HMRC could drive them out of business in pursuit of those bills,” warned FO’s chief executive Conrad Ford.
Ford believes the “dramatic” jump in unpaid VAT may be partly driven by the “growing” incidence of large businesses not paying their smaller suppliers on time.
He said the government had set up the Small Business Commissioner to tackle the “persistent problem”, but claimed that only eight small traders have so far been helped with disputes.
The nuts and bolts of the tax system may also be behind the 22% rise in outstanding VAT -- it stands at £3.02bn in 2017/18, up from £2.4bn in the previous tax year.
Specifically, suppliers often get their VAT totted up when they invoice a client, not from when they pocket the cash, so a tax bill can arise with no means to pay until their client pays.
“[But] outstanding corporation tax bills have also risen 5% to £2bn, up from £1.9bn”, said Funding Options, which found the bills were £1.8bn in 2015/16; £1.6bn in 2014/15 and £1.5bn in 2013/14.
8th November 2018