Toys R Us struggles offer small retailers a lesson in VAT practice
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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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.