By Claire West

Bob Bailey, partner at Baker Tilly Restructuring and Recovery LLP said,

"A proposal currently under consultation for HM Revenue & Customs to collect PAYE on a real time basis (titled Real Time Information) direct from salary and wage payments to employees could cause businesses detrimental cashflow headaches. Ailing businesses already in a fiscal squeeze will feel additional pressure to their bottom line.

"As PAYE is only currently due by the 22nd of each month, many companies would have undoubtedly been using the funds up to that point in the month as critical working capital to pay down debt and loan interest payments, for example.

"This may sound like small change versus some of the other cashflow challenges for struggling businesses, but the PAYE 'pot' could run into millions for larger organisations and they may, if the proposals are given the green light, no longer have this available to help balance the books.

“Businesses may be wise to start planning for the eventuality and seek advice early before this becomes a further issue to add to their current working capital challenges."

Additional comment is available from Bob Bailey or Phil Pierce, Baker Tilly Restructuring and Recovery LLP partners and cashflow advisors.