Zombie firms out of time

Critical: Andrew Walker
Critical: Andrew Walker
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ZOMBIE businesses kept alive by deferring tax payments could be facing death under a crackdown by the Inland Revenue, according to insolvency trade body R3.

The Revenue’s Time to Pay scheme, launched in 2008, has given more than 33,000 businesses in Yorkshire and the Humber valuable breathing space in tough times.

But new figures show the number and value of arrangements has fallen dramatically this year.

Yorkshire R3 chairman Andrew Walker, of Sheffield law firm Irwin Mitchell, said: “The Time to Pay scheme has been responsible for keeping a lot of zombie businesses artificially alive.

“The continued decline in the number and value of arrangements shows that the taxman is now taking a much tougher stance.

“This is backed up by the recent sharp rise in company liquidations which indicates that HMRC is now stepping in to wind up companies that have been given time to pay and still not done so, or late payers without agreements in place.

“Companies with cash flow problems should be aware that they can no longer rely on deferring their tax bill as a survival strategy, but must seek professional advice to get their house in order.”

He also criticised an HMRC decision to stop publishing the number of Time to Pay agreements being struck across the country.

Since November 2008, 33,400 businesses regionally have deferred £550m in tax.