COMPANIES are turning to short term finance to pay off tax demands by HMRC, according to lenders.
Income tax receipts hit an all-time high of more than £153bn in the last tax year.
HMRC issued more than six million letters warning people that they face a tougher penalty regime. Fines of up to £1,600, automatic penalties of £100 and new £10 per day fines helped increase the Treasury coffers.
An extra ‘late payment’ fine is due on August 1st 2012 – or a penalty equal to 5 per cent of the tax due. This could be a significant amount if the individual is a higher rate taxpayer.
Chris Baguley, managing director of Bridging Finance Limited, said: “The mix of personal tax, corporation tax and VAT pressures are leading to a surge in demand for short-term finance from businesses that need rapid access to funding.
“When a tax demand is made it is often for an amount that companies can’t access immediately or within the required time period. This is a perfect opportunity for a bridging loan which can be secured on a property and funds available within 48 hours. We’ve seen a 30 per cent increase in the number of businesses requiring bridging loans to pay off corporate tax demands.”