Cameron calls for tax-bill mercy to save firms from going under

ONE of the country's most prominent business leaders last night warned that the heavy-handed pursuit of debt by the tax authorities could force credit-crunch-hit companies out of business.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, made an impassioned plea to local and central government to understand the problems faced by firms battling to survive the economic slowdown.

And last night Cameron's call appeared to fall on sympathetic ears as HM Revenue & Customs (HMRC) promised to look sympathetically on firms that came to them with problems.

Cameron spoke out on the eve of the publication today of the Chambers' latest quarterly survey of business confidence, which found "clear evidence of a looming recession" in Scotland.

Cameron said the challenge for both businesses and governments was to ensure that the downturn was "as brief and shallow as possible".

But her main focus was on HMRC, which collects income and corporation tax and VAT.

She warned: "We do not want to see government departments putting businesses out of business.

"In the current climate it is likely that businesses might perhaps miss their VAT payments or fall behind in payments.

"They might also have difficulty with their income and corporation tax payments.

"What we are saying is that we would like tax officials to understand the constraints that businesses are under and not to be heavy-handed in their dealings with them."

Cameron demanded a speeding up of the planning system, which she said was stymying businesses. And she called on government and local councils to take a more flexible approach to the awarding of contracts to local businesses.

Last night a spokesman for HMRC in Scotland said: "Any company with a problem should get in touch with us as soon as they get into difficulties.

"We like people to pay on time, and the amount due … but we always look to see if we can help a company trade through a problem so it can eventually pay us what it is due.

"As long as there is a plan for payment, it is not in the taxpayer's interest for us to put a company which can pay its way out of business."

According to the Chambers survey business confidence continued at record weak levels.

It found that 52 per cent of manufacturing, 62 per cent of tourism, 65 per cent of retail and 74 per cent of construction respondents reported being less confident than at the end of June.

The survey showed that trading conditions had been difficult for several quarters in manufacturing, construction, retail and tourism.

In manufacturing and construction the proportion of businesses reporting weakening trends in total orders has risen each quarter since the end of 2007, the survey said.

In construction the declining levels of domestic and private commercial activity had contributed to the proportions reporting declining trends in the levels of new contracts.

The net trends in "work in progress" were the weakest recorded in the history of the survey.

And in the service sector the proportion of retail respondents reporting weakening sales trends has increased each quarter since the last quarter of 2007.