SMEs are Paying Tax Bills on their Credit Cards
Businesses struggling to pay their tax bills are being pushed to pay by credit card rather than defer the tax under the Time to Pay scheme, accountancy firm UHY Hacker Young has claimed.
The accountancy firm warned that firms which use credit cards to pay their tax bill are charged an additional 1.25 per cent on the payment by HM Revenue & Customs (HMRC).
The Time to Pay scheme, launched in November 2008, to allow viable businesses to defer payments of VAT, corporation tax, PAYE or income tax to help them manage their cashflow during the economic downturn.
“HMRC have been taking a much tougher stance on Time to Pay arrangements,”
said UHY Hacker Young tax partner, Roy Maugham.
“It is increasingly insisting that businesses pay tax on credit card first, before it will consider letting them use Time to Pay. Businesses could be looking at five figure credit card bills.
“If a business is struggling for cashflow, the last thing it needs is a credit card bill. HMRC should be more sensitive to the cashflow problems many businesses are facing and allow six months grace so that they can pay tax on credit card without incurring additional costs.”
An HMRC spokesman disputed the claims.
“HMRC has not changed its policy or criteria for granting time to pay to those who are in temporary financial difficulty. Before granting time to pay we need to be satisfied that a business is genuinely unable to pay or to raise the money to do so.”
“Payment by credit card is one of a number of payment options open to businesses and individuals. For those who choose to pay by credit card the law requires HMRC to charge a 1.25 per cent transaction fee.”
“Our website provides information on when and how to pay, and what to do if people have problems paying HMRC.”
For further information see the HMRC website.