Cash-strapped business paying tax on the never-never (From York Press)

Cash-strapped business paying tax on the never-never

11:26am Wednesday 8th February 2012 in Business news

RECORD numbers of cash-strapped businesses are resorting to paying tax with their credit cards, according to figures obtained from HM Revenue and Customs.

In 2005/06, just 6,083 credit card payments, totalling £2.2 million, were made to the Inland Revenue to meet PAYE, corporation and personal tax bills.

But for the financial year ending March 31, 2010, this figure was 365,221 credit card transactions, totalling £485,919,312. Between April and October 2011, £266,570,881 had already been collected through 184,587 credit card payments.

The figures were obtained under the Freedom of Information Act on behalf of the debt recovery team at Harrogate-based Ashworth Law, which said they represent a 220-fold increase in the amount being paid “on the never-never” and lifted the lid on the true extent of the financial crisis facing struggling businesses.

Mathew Cobley, joint chief executive of Ashworth Law, said: “Over the last 12 months, we have witnessed a three-fold increase in the value of debts we are being asked to chase on behalf of our clients, while the at the same time the debtors are asking for longer to pay.

“Debts pose a serious threat to the future success of many businesses – with cash flow increasingly becoming the biggest problem.

“If the Inland Revenue didn’t accept credit card payments then I am confident we would see a lot more businesses going to the wall.”