HMRC will take “a cautious approach” this summer when it comes to pursuing businesses struggling with Covid-related debts for unpaid taxes, according to a report in the Financial Times.
There are fears that many under pressure companies may be unable to survive once emergency support measures begin to wind down from next month.
According to the FT report, business secretary Kwasi Kwarteng has written to business groups saying HMRC will take “a cautious approach to enforcement of debt owed to government that will have accrued” during the pandemic.
He said HMRC would shortly be updating the approach to enforcement and seek to bring outstanding debts that companies were struggling to pay into managed arrangements.
The minister said he recognised that the “path back to full trading will be difficult for many companies, particularly those with accrued debt and low cash reserves”.
And he added that HMRC enforcement “during this critical period will be largely driven by a lack of engagement by companies with it, rather than just their inability to pay and that using insolvency to enforce payment will remain a last resort”.
The minister’s letter came as a ban on landlords evicting firms for unpaid commercial rent has been extended for another nine months.
The current moratorium, which prevents landlords taking tenants to court for non-payment, was set to come to an end on June 30, 2021. It will now be extended until March 25, 2022.
The move follows the delay of the final stage of the government’s roadmap out of lockdown. Lockdown restrictions, which were to be lifted on June 21 in England, will now not end until July 19, amid alarm at the spread of the Delta variant of the Covid-19 virus.
Announcing the move, chief secretary of the Treasury Stephen Barclay said that the delay in easing lockdown restrictions “present additional challenges” to business.
The government also has plans to introduce a mandatory arbitration process to tackle debts where landlords and tenants cannot agree.
Mr Barclay said the government was acting because of the “threat to jobs” in many businesses affected by the pandemic.
And he added: “We believe this strikes the right balance between protecting landlords and supporting those businesses that are most in need.”
Mr Barclay also said that businesses no longer facing trading restrictions should start to pay rent again.
Hospitality industry leaders had warned of a “cliff edge of failure” without a longer grace period, with venues still closed or operating at less than full capacity.
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