In a new study from Premium Credit, a leading provider of finance for companies and business owners’ tax bills,  54% of accountants and financial advisers cite the cost of living crisis as one of the main three reasons why clients are struggling to pay their tax bills. This was followed by 50% who said clients have seen their revenue fall, and 49% who cited personal circumstances of clients such as divorce.

Reason why clients are struggling to pay their tax bills Percentage of accountants and financial advisers interviewed who said this is one of the top three reasons why clients are struggling to pay their tax bills
Cost of living crisis54%
Company revenue and sales have fallen50%
Personal circumstances of clients e.g. divorce49%
Change in employment e.g. made redundant45%
Clients business wage inflation for staff  42%
Clients profit margins have fallen37%
Clients cost of supplies have increased23%

Premium Credit’s research shows accountants and financial advisers are seeing growing evidence of worries about tax among their clients.

When a corporation tax bill is overdue and a company doesn’t respond, HMRC may send a bailiff or enforcement officer to the organisation’s premises to identify goods for seizure. Just over half (55%) of accountants and financial advisers surveyed say some of their clients have experienced this, and 73% expect this to be the case in five years’ time.

Alternatively when a company is struggling to pay its corporation tax HMRC may be willing to offer them more time to pay. Its Time to Pay (TTP) scheme allows eligible businesses extra time to repay tax arrears – usually over a period of three to six months. One in three accountants and financial advisers (33%) surveyed by Premium Credit say they have clients on the TTP scheme, but that rises to 60% who expect this to be the case in three years’ time. 

Premium Credit’s Tax and VAT funding proposition allows companies and business owners to spread the cost of their VAT, corporation tax and self-assessment tax payments for up to a year. The company  saw the total amount of money it lent to help fund clients’ VAT bills rise by 18% in 2023 when compared to 2022. The corresponding increase for funding non-VAT tax bills is 19%.

The number of clients using Premium Credit’s Tax and VAT funding proposition increased by 59% between 2022 and 2023. Last year, the average size of loan to help pay VAT tax bills was £101,352, and for non-VAT tax bills it was £73,625.

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Commenting on this, Premium Credit chief commercial officer, Jennie Hill, said: “It is clear from our research that many accountants and financial advisers are concerned about a rise in clients struggling to pay their tax bills. For those that are finding it difficult to do this, they should engage with their advisers as soon as possible and review the options open to them to spread the cost of payments.”