The Business Payment Support Service allows payment of Crown taxes including PAYE, National Insurance and VAT to be deferred for up to six months, and by mid-June a total of £2.5bn had been deferred by more than 140,000 struggling businesses across the UK.

In Scotland 8380 businesses had been allowed to defer tax payments totalling £155m, an average of £18,500 per firm. That includes almost 1000 companies in Glasgow, deferring £26m in tax.

More than £1bn of the UK total is deferred VAT – some 1.5% of the government’s projected VAT receipts for this year.

“The sums are worrying and already questions are being asked about how much of these deferred payments the Revenue will eventually realise,” said Eileen Blackburn, head of business recovery at the accountants, French Duncan.

“Some advisers are asking is this scheme facilitating deferred payment or deferred insolvency?”

Chancellor Alistair Darling announced the scheme in the pre-Budget report last November. “There was an all round sigh of relief,” Blackburn said.

“He was speaking at the low point of the downturn and many small businesses – the lifeblood of the UK economy, employing more than 13 million people – were staring into an abyss, so understandably, many companies jumped at the opportunity.”

But she went on: “The likelihood is that many of the companies which have clutched at this fiscal straw will go bust anyway.

“The scheme was predicated on the rather rosy assumption that cashflow would, within a matter of months, be restored not only to previous levels but to levels which would give companies enough of a surplus to pay off their deferred debts as well.

“The evidence that this is happening is pretty thin on the ground.”

A company which could not afford to pay its tax bills in November “will have to have performed miraculously to be able to pay them off now”, Blackburn added.

“The crunch is likely to come at the end of this month – businesses which have deferred for six months would have had until April to repay, and by the end of July, another quarter’s payments will be due and time will have run out.”

The UK insolvency sector is anticipating that up to 5000 companies will go into administration or receivership in 2009. But up until this month, only 1500 had gone under.

According to French

Duncan: “This suggests that a dam of 3500 insolvencies is just waiting to burst and that only the cement of the Business Payment Support Service has kept it intact so far.”

In his Budget in April, the Chancellor broadened the scope of the BPSS so that businesses will be able to have an anticipated loss taken into account as part of any rescheduling of their tax payments.

Business leaders have estimated that some £5bn of deferred tax could have piled up by the autumn, and HM Revenue & Customs has said there is “no limit” on the total.

But the Federation of Small Businesses has warned that there has nonetheless been “a tightening of the parameters”.

Valerie Smart, tax partner at PricewaterhouseCoopers in Edinburgh, commented: “Businesses are getting more favourable treatment than individual taxpayers struggling to pay their tax, but some businesses are approaching them simply because they have got cashflow problems and could pay if they had to, and are surprised when the Revenue is not quite as receptive.”

She added that as the scheme approached the end of its first year, “we are going to see more administrations because people feel they can’t go on”.

Tax Advice Network has told advisers: “We under-stand that some HMRC officers are telling callers to the BPSS that there is a cap of £10,000 on the amount of tax debt over which they can negotiate. This is not the case.

“Be persistent and offer to hang on the line until a senior officer has intervened to agree a payment plan over the phone.”

The lull in insolvencies could last another quarter, according to Tenon Recovery. It claims the crunch will come in October, when 3000 businesses across the UK could fail – twice the total in the first half of the year – including 300 in Scotland.

“Businesses are allowing problems to escalate over the holiday period, which will be the main reason for this post-summer surge in insolvencies,” said Tom MacLennan, head of Tenon Recovery in Scotland.

“Sectors most at risk are property development, retail, leisure, printing and manufacturing.”

He added: “The next few months may well define how long the downturn will last. There are some 4.5 million SMEs in the UK, making up a significant proportion of the UK econ-omy – a considerable increase in the number of small business insolvencies would be hugely detrimental and could prolong what has already been a very painful recession.”