HMRC slow to pay out £4.6bn corporation tax refunds

HMRC paid out £4.6bn to businesses in refunds for corporation tax last year, but delays in making payments are putting pressure on cashflow for some companies, according to research by UHY Hacker Young.

Figures obtained by the firm show that some 286,000 businesses received a corporation tax rebate in the year to 31 March 2013, equivalent to an average refund in overpaid tax of more than £16,000 each.

The number of approved claims for corporation tax refunds is down 17% on 2011/12 when there were 346,000. There were 386,000 in 2010/11.

Roy Maugham, tax partner at UHY Hacker Young, said: ‘UK businesses are still finding that they are overpaying their corporation tax in the billions of pounds. It shows how important it is for companies to regularly review any overpayment of tax as HMRC will not be looking to see if it owes them money.’

Maugham also said the analysis suggested repayments can sometimes take between 12 and 24 months to organise, with two to three months being fairly typical.

‘This can make the burden for companies struggling with unexpected losses or lower than anticipated revenues even heavier. It’s not unheard of for some to simply fold under the pressure in the meantime, as cashflow dries up.

'Given that the number of rebates has been falling in the last few years, HMRC should be getting quicker but this doesn’t seem to be happening in reality,’ Maugham said.

 

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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