Judgments Show That Taxes Are Low Priority For Struggling Firms
15 October 2013
Posted by: Author: Sarah McCabe
Author: Sarah McCabe
WHEN money is tight and bills are high the temptation for business is to prioritise payments for the likes of heating and product supplies over rates.
New research reveals just how much businesses are de-prioritising tax and other Government charges in favour of other bills.
The research, from credit tracking agency Vision-net, found that more businesses were being chased through the courts (pictured) over taxes than any other type of debt.
It showed that one out of every two court-registered judgments made against companies in the last year relates to either taxes or levies such as commercial rates.
In the 12 months ending in August, 49pc of all judgments awarded against Irish companies were made in favour of the Revenue Commissioner and local authorities. No other creditors played such a dominant role.
"The inability of Irish companies to meet their taxation obligations to state agencies, ie both revenue and local authorities, remains a significant problem," said Christine Cullen, manager of credit tracking organisation Vision-Net.
"There is lots of evidence to suggest that companies are prioritising other debts over their local authorities bills and tax bills," added Ms Cullen. "They are prioritising paying the type of bills that keep their businesses going. Electricity bills, wages – they keep doors open, not tax returns."
The high burden of debt carried by Irish businesses was also clear from the statistics. The average size of each registered judgment was about €42,000.
In more positive news, the research also showed that the level of corporate insolvencies recorded during the period had declined significantly compared to a year before – down by 15pc.
"Lots of companies which were on the brink – especially those in the construction industry or hospitality – have by now either closed or traded out of their difficulties. It's very encouraging to see that gap closing. It bodes well for further economic growth," said Ms Cullen.
This article first appeared in independent.ie.