HMRC tax receipts show a 70bn fall as compared with last year which suggests an overall shortfall in tax receipts this year of some 20% say leading tax and advisory firm Blick Rothenberg.
Heather Self a partner at the firm said, “A large part of this relates to taxes deferred, particularly in relation to VAT (£38.7bn fall for the first 6 months) where businesses were permitted to defer all payments due for a period. Some of this cash will come back over the next couple of years.”
She added, “The fall in Corporation tax is huge – almost £12bn over the first 6 months, suggesting total corporation tax receipts will be down by more than a third over the year as a whole. In October alone, receipts were down by almost £7bn, although this was partly offset by about £3bn higher receipts from the largest companies in September due to a change in their payment pattern.”
Heather said, “As businesses head into a difficult winter, tax receipts are likely to stay low for the rest of the year. In many cases, losses in 2020 will generate tax repayments for the previous year, so there is little good news to come for Government coffers over the coming months.”
She added, “For income tax, the critical month will be January which is the main payment date for self-assessment. In January 2020, tax receipts were about £50bn in that month alone – it is hard to predict how much lower that will be by January 2021 Overall, Mr Sunak has a large hole to fill in his bucket.”