Many companies have relied on the "goodwill" of HM Revenue and Customs who have agreed to defer tax bills over some quite long periods to enable the company to trade through what will hopefully be short term difficulties.
In most cases a condition of this type of agreement is that the company can meet its ongoing tax bills as they fall due. In other words why would HMRC agree to defer a current bill if the company cannot actually meet future bills?
The company tax regime in the UK is currently relaxed and is presently helping thousands of firms by allowing them to spread repayments of otherwise overdue tax.
However as times get more difficult for public finances the UK Government may need to tighten up its approach, demanding repayment from companies ill equipped to pay.
Companies should therefore see this support from HMRC as nothing more than breathing space to enable management to address the difficulties in the business.
We fear that when support is no longer available many companies will be unable to meet their obligations to HMRC. There is, therefore, likely to be an extended tail of insolvencies in the UK, even once the chaps with the magnifying glasses have spotted the green shoots of recovery.
In this article we present some basic approaches to addressing financial problems. There is no substitute however for taking early advice before a situation becomes irretrievable.
Gore and Company assists firms by carrying out business options reviews that can, for example, help you to foresee and manage the nasty surprises that may arise when the Government does begin to rein in on assisting businesses through the tax system.
Read more in our July Update Series