The rapidly declining value of Time to Pay tax deferral agreements in the IT
sector could spell major trouble for the channel in the coming months.
Figures obtained by leasing firm Syscap under the Freedom of Information Act reveal IT and telecoms firms agreed a total of £20m in tax deferral arrangements during 2010’s first quarter. This is almost 60 per cent down on the £48m worth of agreements signed in Q1 2009.
Eddie Pacey of distributor Bell Micro said: “Some businesses have needed to use [Time to Pay] money for other purposes and, if those purposes did not deliver bottom-line value, when the time comes to pay that money back, they are going to have a problem.
“They may have to try to defer payments to suppliers or face toppling over.”
The Time to Pay scheme was launched almost two years ago and was extended for a further five years as recently as March. But, following the change of government in May, its future has been called into question.
As of the end of March, a total of more than 300,000 plans had been agreed,
worth upwards of £5bn in deferred taxes. The technology sector has been one
of the hardest hit by the increasingly stringent conditions that have been applied by the scheme.
Syscap chief executive Philip White claimed that many agreements now covered deferrals of three to six months, rather than the year-long arrangements offered last year.
He added that many organisations are required to apply for a bank loan or pay taxes with a credit card to take advantage of the scheme.
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