London’s small and medium-sized businesses are facing an “autumn cashflow crisis” as a cluster of tax deadlines threatens to compound already severe pressure from rising wages, energy and supply costs, according to tax advisers.
Praveen Gupta, UK Head of Tax at international accountancy and business advisory group Azets, warned that firms could find themselves short of cash as three major payment deadlines converge in October.
Businesses face Corporation Tax payments on October 1, VAT returns on October 7 and PAYE Settlement Agreement payments on October 19 for postal payments and October 22 for electronic and online payments.
The concentration of liabilities could leave companies scrambling to find funds at a time when operating costs remain elevated.
“Many businesses are struggling with the increased cost of wages, supplies and energy, which is hitting their cashflow levels hard,” Gupta said.
“There’s a real risk they could face an autumn cashflow crisis when these tax bills are due if they haven’t put aside the money to pay them or thought about what they might do if they don’t have the funds to pay these bills.”
The warning comes as businesses continue to navigate a difficult trading environment, with higher employment and input costs squeezing the cash available to meet tax obligations.
Azets, which has its London base near London Bridge, said businesses concerned about their ability to meet the deadlines should consider their financing options before bills fall due.
Potential routes include borrowing from a bank or commercial lender, or negotiating a Time to Pay arrangement with HM Revenue & Customs.
“HMRC will consider repayment plans under a TTP for businesses that can’t meet their full Corporation Tax, VAT or PAYE payments – especially if you have the capacity to make a part-payment upfront,” Gupta said.
“These arrangements usually give you between six and twelve months to pay your outstanding debts, although that does depend on your circumstances and they will need to be satisfied that you’ll honour the arrangement.”
But delaying the problem could prove considerably more expensive.
Gupta warned that HMRC has become increasingly aggressive in pursuing companies over unpaid tax, with the authority taking legal action against businesses that fail to settle their debts.
“Since the end of the pandemic, HMRC has been proactive in going to court to get companies wound up if taxes aren’t paid on time – and they don’t seem be softening their approach, so firms who don’t pay their tax bills are could face a court hearing and a winding up order,” he said.
The warning places renewed focus on cashflow management as companies approach the final quarter of the year.
Gupta urged directors to monitor their finances closely and seek professional advice before tax liabilities become unmanageable.
“You wouldn’t drive a car without a dashboard, and you can’t run a business without knowing what your key tax and payment deadlines are and how much cash you have available to pay them,” he said.
“Knowledge really is power – in this case, the ability to pay all your bills on time without running into problems.”
“If you’re worried about your tax position or your finances, the best thing you can do is speak to an accountant – they’ll be able to help you understand what you need to do, when you need to do it by and how much cash you need to hold back for key moments in the financial calendar.”
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