Loan requests surge as SA deadline looms

Demand from businesses for loans to help pay tax bills is accelerating ahead of this month’s self-assessment deadline, according to Syscap, an independent finance provider.

The company, which serves the IT sector, said outstanding loan requests from firms specifically for the funding of tax payments reached 427 this month, up 62% from the 263 in the same period last year, and the average size of a request was £450,000, more than twice the £200,000 of 12 months ago.

CEO Philip White said anecdotal evidence from customers suggested HMRC have been gradually making it harder over the past six months for businesses to make use of Time to Pay. He added that the Revenue has also become more reluctant to extend credit once a firm’s existing agreement has come to an end.

‘Although HMRC currently will not force a business to sell its essential assets to pay a tax debt, [the department] may expect them to sell more liquid assets. A poorly timed sale of assets could cost a business dearly,’ said Mr White.

‘As the recession drags on, more companies are burning through their liquid assets, and some are finding it harder and harder to get their customers to settle bills on time. That means we may see a record number of perfectly viable companies unable to pay this January’s tax bill from their cash reserves.

‘Normally, a business might go to their bank, but many small and mid-sized firms are finding that the bank they have been with for years is no longer interested in lending at a sensible rate, or that it wants to tack on huge arrangement fees even for small loans,’ said the Syscap boss.

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