Can web hosting users delay their tax payments?

Everyone wants to save on pennies at the current time and no doubt many firms will be looking to avoid any tax outgoings. Now it seems that IT organisations, such as those using web hosting services, have seemingly leapt onto a government scheme allowing businesses to delay their tax payments.

HM Revenue and Customs, which gave its blessing for the ‘time to pay’ arrangements, has now released details of those organisations that have taken advantage of the scheme between November 24th 2008 and September 27th 2009. For the IT sector, the agreements totalled £291 million in owed tax, while 17,240 IT/telecoms businesses used the arrangements.

Over all sectors, 210,000 individual agreements were made and the overall level of money owed across all sectors came to £3.71 billion. By September 27th, a total of £2.63 billion had been repaid, both in part and in full. This left £1.08 billion still to be paid.

So why would the IT industry need to use the time to pay scheme perhaps more than other sectors? Head of the tax policy group for Deloitte Bill Dodwell said he thought there are many small businesses and contractors in the industry that are either not receiving payments themselves or simply are not getting the work.

He claimed that this situation is not unique to the IT industry. Mr Dodwell commented: "Clearly they’re going to have a lot of difficulty paying their tax bills.

"It’s the small, self-employed, limited companies that use it [the time to pay scheme], because tax bills are usually paid in fairly lumpy amounts, and that’s what hits people."

He said that it is positive HM Revenue and Customs is "actually being helpful".

According to UK Trade and Investment, the ICT industry contributes £66.4 billion every year to the UK economy and it has been one of the fastest growing sectors over the previous decade.

Written by Freddie Simmonds.