Brexit troubles have forced nearly 700,000 consumers and businesses to reschedule their tax payments with HM Revenue and Customs, according to an accountancy group.
Research from UHY Hacker Young, out today (October 7), showed as at the end of June 681,000 individuals and companies had arranged ‘Time to Pay’ agreements with the taxman.
These agreements allow taxpayers to pay their taxes over an agreed period of time, but UHY claims the process can be “extremely difficult to negotiate”.
The firm thought the high number was down to uncertainty over Brexit and the subsequent broader slowdown of the economy.
This had put the finances of small businesses and individuals in a squeeze and made it harder for them to pay their tax bills, according to UHY.
UHY thought HMRC’s controversial loan charge was also likely to have caused a surge in the number of taxpayers forced to negotiate ‘Time to Pay’ arrangements, but the taxman has rebutted this as repayment plans for the loan charge differ to the 'Time to Pay' arrangements.
As the loan charge — which is now under review by the government to examine if the legislation was fair — asks consumers for a lump sum to repay the tax owed, many have had to enter a form of repayment plan with HMRC.
Clive Gawthorpe, partner at UHY, said: “With the economy putting both small businesses and personal taxpayers under so much pressure it’s no surprise that people are struggling with their tax bills.
“What is surprising is it that it is now affecting more than half a million taxpayers.”
An HMRC spokesperson said: “HMRC has an excellent track record of helping those with debts owed to come to manageable payment plans which can be spread over a number of years. We disagree with the assertion that they are notoriously difficult to negotiate.
“At the end of 2018/19 we had more than 700,000 Time to Pay arrangements in place to support our customers who are unable to pay the money they owe in full, and more than 90 per cent of these are completed successfully.”
The spokesperson said HMRC worked with customers on a case-by-case basis to help them pay any outstanding debt back in an affordable way and urged anyone who anticipated problems paying their bill to contact the department.
Taxpayers who take advantage of these payment plans will also face interest charges, with the rate determined by how long the debt has been due.
Michael Crellin, tax director at UHY, said: “HMRC’s attitude has always been that interest is not negotiable, it is simply 'commercial restitution as the tax payer has had the use of the money'."
"The current interest rate is a fairly low 3.25 per cent, but that is not much comfort to many taxpayers, especially those looking at controversial 'disguised remuneration' settlements going back potentially 20 years."
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