--- title: How Are Cashflow Challenges Causing Small Business Tax Debt? description: A big cause of the recent rise in unpaid tax debt within businesses is due to them struggling with cashflow challenges, especially start-ups or SMEs. image: https://www.pridebt.co.uk/hubfs/cashflow-challenges-causing-small-business-tax-debt.png --- [![logo](https://www.pridebt.co.uk/hs-fs/hubfs/logo.webp?width=178&height=84&name=logo.webp "logo")](https://www.pridebt.co.uk/) [01733 229 466](tel:01733%20229%20466) [01733 254 244](tel:01733%20254%20244) [info@pridebt.co.uk](mailto:info@pridebt.co.uk) - [Home](https://www.pridebt.co.uk) - How We Can Help - [Small Business Legal Debt Recovery](https://www.pridebt.co.uk/small-business-legal-debt-recovery) - [Private Legal Debt Recovery](https://www.pridebt.co.uk/private-legal-debt-recovery) - [Legal Debt Collection For Landlords](https://www.pridebt.co.uk/legal-debt-collection-for-landlords) - Debt Recovery - [Debt Collection Process](https://www.pridebt.co.uk/legal-debt-recovery-process) - [Debt Collection Cost](https://www.pridebt.co.uk/debt-recovery-costs) - [Debt Collection Timeframes](https://www.pridebt.co.uk/debt-collection-timeframes) - [Blog](https://www.pridebt.co.uk/blog) - [GET Started](https://www.pridebt.co.uk/make-your-claim) # Blog Get Started ![banner-featured-image](https://www.pridebt.co.uk/hs-fs/hubfs/banner-featured-image.webp?width=546&height=598&name=banner-featured-image.webp) ![A business owner looking at documents showing cashflow challenges that have caused his business to go into debt ](https://www.pridebt.co.uk/hubfs/cashflow-challenges-causing-small-business-tax-debt.png) ## Cashflow Challenges Causing Small Business Tax Debt 5 October 2023 Businesses struggling with [cashflow challenges](https://www.pridebt.co.uk/small-business-legal-debt-recovery) have been identified as one of the main causes behind the recent rise in unpaid tax debt. HMRC recently published a report that revealed the amount of unpaid tax still owed to the Exchequer had reached £44.5 billion by the end of June this year. That represents a 6% year-on-year increase. HMRC say the majority of the [tax debt](https://www.pridebt.co.uk/blog/six-legal-requirements-for-legal-debt-collection) is owed by small and medium-sized businesses, with inflationary pressures cited as the cause of the cashflow problems. ## Late-Payment Rates Set To Rise The [HMRC performance update report](https://www.gov.uk/government/publications/hmrc-quarterly-performance-report-april-to-june-2023/hmrc-performance-update-april-to-june-2023) shows that there were 892,673 taxpayers in Time to Pay (TTP) arrangements at the end of June, which was actually a decrease from the 912,233 recorded in March. This shows that while there is only a small difference in the number of taxpayers filing their returns and declaring liabilities on time, there has been a significant decrease in the number of taxpayers actually paying on time. The Head of Tax Dispute Resolution at accountancy and business advisory firm BDO, Dawn Register, warned late-paying businesses by saying: “Those businesses that are struggling to pay on time also face the prospect of having to pay higher rates of interest for late payments. “Late payment interest is currently at a 15-year high of 7.5% and this is set to rise even further following the decision by the Bank of England to raise base rates.” Another indication that small to medium-sized businesses are struggling with cashflow problems is the business failure rate, which is at its highest for 14 years. ## Civil Compliance Checks Increasing In response to the [unpaid tax debt,](https://www.pridebt.co.uk/blog/the-legal-debt-collection-process) HMRC has been opening a significantly higher number of civil compliance checks against taxpayers. Representing a 28% year-on-year increase, there were 77,000 new civil compliance checks opened in the first quarter of the 2023-24 tax year. The register also commented on the rise in civil compliance checks, explaining: “HMRC has been under significant pressure to step up its compliance work in recent months, and this may indicate the start of a determined effort to ensure that businesses and individuals pay the right amount of tax.” ## Contact Us Have a debt owed to you but not sure where to begin in getting your money back? Give us a call on 001733 964524 or click here to get in touch today. 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