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COMPANIES are turning to short term finance to pay off tax demands, according to lenders Bridging Finance.

A major crackdown by the taxman, a bank credit squeeze and the volatile property market has led to a 30 per cent surge in companies and high net worth individuals using bridging loans to pay tax returns, says the firm.

Chris Baguley, managing director of Bridging Finance, said: “When a tax demand is made it is often for an amount that companies can’t access immediately or within the required time period.”

Taxi firms and property landlords in Sheffield are the latest small businesses to be targeted by HM Revenue and Customs, according to Robin Milnes, who runs TaxAssist Accountants, the Sheffield firm that specialises in providing tax and accountancy services to small businesses.