News
Danny McCance 6 Nov 2018 09:46am

HMRC owed £3bn in outstanding VAT

The amount of VAT outstanding from UK businesses reached a five-year high in 2018

HMRC is now owed £3bn in VAT, an increase of 22% for the year to March 2018, up from £2.48bn for the previous period, according to Funding Options.

For the year to March 2015 outstanding VAT stood at £2.55bn.

Overdue corporation tax bills also rose to £1.98bn for the year to March 2018, a 5% increase from the previous period.

Late payment from larger business to their smaller counterparts has been pointed to as a driving factor behind the rise in outstanding VAT.

In March, research from the Federation of Small Businesses (FSB) found that 84% of small businesses reported being paid late.

At the time, FSB Mike Cherry said the crisis had caused the closure of an estimated 50,000 small businesses.

“We believe the value has increased because of an upward growth of businesses registering for VAT,” an HMRC spokesperson said.

“HMRC’s Cash Accounting Scheme allows businesses with a VAT-exclusive turnover of up to £1.35m to account for VAT when it is actually received from customers, rather than on the basis of invoices issued,” they added.

The government launched the Small Business Commissioner (SBC) at the in December last year to help with late payment and unfavourable payment practices.

An SBC spokesperson said the most up-to-date figures show that out of 210 enquiries, 14 fall within the scope of the scheme, and of these 10 have resulted in monies being recovered – this totalled £401,387.

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