28/01/2012 11:12 GMT | Updated 29/03/2012 06:12 BST

Business Struggle To Pay Tax Bills After Turning To Credit Cards

An increasing number of businesses are struggling to pay their tax bills after new figures show a growing number are using credit cards to make their payments.

During 2005 and 2006 businesses made 6,083 credit card payments to HM Revenue and Customs for PAYE, corporation and personal tax bills. In financial year ending March 31 2010, there were 365,221 transactions, data shows.

The credit card payments in 2005 to 2006 totalled more than £2m and in 2009 to 2010 it increased to just under £486m, said Ashworth Law firm, which conducted a Freedom of Information request to collate the data.

The firm said that the figures show the "true extent" of the financial crisis facing struggling businesses.

Ashworth Law joint chief executive Mathew Cobley said: "Debts pose a serious threat to the future success of many businesses - with cash flow increasingly becoming the biggest problem.

"If the Inland Revenue didn't accept credit card payments then I am confident we would see a lot more businesses going to the wall. This and the Time to Pay scheme are real lifelines.

"However, this could perhaps be avoided if companies improved their cash flow and chased debtors more aggressively."

Cobley added: "Credit cards may be a short-term fix, but the message is that businesses need to have a proper credit control mechanism in place, so they have the money in the bank to avoid credit cards and the high interest rate that will continue to plague them."