As the clock ticks on Toys R Us to stump up the cash to HMRC for its 15m VAT bill, tax experts have urged small business owners to consider their own practices.
The struggling retailer’s UK division, which employs around 3, 200 staff in Britain, is still without a buyer with a deadline set for today (Tuesday 27 February). The business is likely to enter administration tomorrow.
After a poor Christmas trading period failed to generate the cash needed to pay of its debts, it is expected that a recently approved Company Voluntary Arrangement which would see 26 stores closed but restructured operations will fail to go ahead.
Administrator Moorfields is believed to be waiting in the wings on the day of the retailer’s deadline, but has declined media requests for comment.
In response to Toys R Us? troubles, experts at?national audit, tax and advisory firm Crowe Clark Whitehill highlighted the importance of timely tax and VAT payments for small business owners, and addressing any problems with HMRC as soon as they arise.
Robert Marchant, VAT partner at Clark Crow Whitehill, explained why the tax office’s Time to Pay system could act as an effective boon to entrepreneurs with a hefty bill.
‘sadly, I am seeing an increase in the number of businesses struggling to make their tax payments on time; businesses may not be aware that it is possible to agree a Time to Pay? arrangement with HMRC that could help to improve the short-term position for that business, he noted.
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Time to Pay allows business owners to pay existing tax liabilities in instalments, covering PAYE, NICs and VAT. It covers immediate payments and cannot be used as a payment plan for future bills.
Businesses should engage with HMRC proactively at the point where it becomes evident that there are financial difficulties, Marchant added.
‘such an approach can help if and when it is necessary to agree a payment plan and also has the benefit of helping with the mitigation of any penalties for late payment. Penalties such as these and owing more money to HMRC simply compounds the problem.