(Bloomberg) -- The U.K. government will take a “cautious approach” on the collection of tax arrears accrued by companies during the pandemic, Business Secretary Kwasi Kwarteng said.
Business groups had urged ministers to go easy on firms, warning that many would struggle to repay their debts when coronavirus-related government support begins to end.
In a letter to the Institute of Directors and trade group R3 this week, Kwarteng said a “flexible approach” would be taken with companies that engage with HM Revenue and Customs and seek to bring their debts into a “managed arrangement.”
Kwarteng also promised that HMRC would “take a cautious approach to enforcement of debt owed to government that will have accrued during this period.” The letter was first reported by the Financial Times on Tuesday.
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An HMRC spokesperson said the government only pursued insolvency action as a “last resort after considering all alternative routes to recovery of a debt”. HMRC will “only take action if a customer does not respond or engage with us,” they said in an emailed statement.
Chancellor of the Exchequer Rishi Sunak's flagship job support program -- paying as much as 80% of the wages of furloughed workers -- is set to run until the end of September. But state support is also set to be tapered away, with employers making up the difference, meeting 10% of the wage payments in July, and 20% in August and September.
Sunak has come under pressure to extend support to businesses after Prime Minister Boris Johnson pushed back the lifting of remaining Covid restrictions until July 19, in a major blow to the entertainment and hospitality industries which are desperate for social distancing measures being dropped.
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