Falcons' issues offers warning for regional firms
A North East insolvency expert is advising regional businesses to learn the lessons of Newcastle Falcons’ recent mix-up over payments due to the taxman.
Gordon Goldie, partner at Tait Walker and a Regional Council Member of R3, the Association of Business Recovery Professionals, says the difficulties suffered by the rugby team give an indication of the risks businesses are taking if they don’t keep up with payments due to the Crown, such as PAYE, National Insurance and VAT.
The Falcons were due to face a winding up order in the Royal Court of Justice in London over the non-payment of National Insurance contributions.
While this turned out to be a misunderstanding, the club had had its bank accounts temporarily frozen, preventing it from paying staff or business expenses.
Gordon Goldie is now advising all North East firms to ensure they keep on top of these payments, especially in the current economic climate when cashflow situations might become stretched.
He said: “The key thing for regional businesses to remember is that money deducted from staff salaries or collected as VAT doesn’t belong to the company, and needs to be passed on to the Crown on time.
“There are very strict deadlines that HMRC imposes around the submission of VAT and National Insurance payments, and whilst the small initial fines for missing these deadlines are well known, the fact is that, in a relatively short time period, HMRC can make running your business extremely difficult and can even stop you from trading.
“The current economic climate makes it likely that an increasing number of regional companies are going to face financial or cashflow difficulties, and the temptation to hold back Crown payments to ease them might be strong, but it is essential for firms’ long-term viability that payments are made on time and that advice is sought at the earliest possible juncture to help head off problems further down the line.”