Freelancers waiting for desperately needed tax rebates

Businesses are waiting twice as long for repayments from the taxman as a year earlier, according to UHY Hacker Young.

They said that clients were waiting longer than a month for repayments, compared to seven to 14 days average turnaround.

"The last thing businesses need is delays waiting for corporation tax refunds - refunds to which they are fully entitled. The financial distress caused by such delays will only add to the woes of companies already facing a struggle for survival," said tax manager Rob Durrant-Walker.

"Unlike the self assessment system for individuals where repayments are largely automated and subject to security checks, all corporation tax repayments have to be processed manually by HMRC."

One of UHY Hacker Young's small business clients had to wait five weeks for repayment of a £35,000 claim that was filed electronically. Durrant-Walker said that such a claim would normally be handled in about a week.

Chris McGowan, head of tax services at MGR, the accountancy arm of ATF Group, has also experienced similar problems, saying refunds for his clients that used to take two weeks a year ago are now taking up to two months. "Hopefully, lessons will be learnt from this so that it will be one less worry for companies trying to survive," he said.

At the end of last year HMRC started to introduce new ways of working in its centralised teams. A spokesman for HMRC said the department recognises December is the most popular filing date for companies, and consequently it experienced peak volumes that month.

"Since September, we have asked customers to clearly indicate if a return contains a repayment request," he added. "If it does, we prioritise it."

In the most recent Budget, the government announced that businesses reporting a loss would temporarily be able to claim up to an additional £50,000 of tax relief in earlier years to help ease financial stress during the downturn.

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Image: Waiting by blmurch