Insolvency trade body R3 says £650 million not paid within agreed deadlines
Almost s1billion in tax is still owed to Her Majesty's Revenues and Customs from the Time to Pay scheme, according to new figures.
Insolvency trade body R3 claims s970 million is still due for payment with s650 million of that not having been paid within agreed deadlines.
The initiative allowed companies to defer tax payments but it is understood some businesses are now into their fourth deferral period.
R3 said the figures suggest many firms are still in significant financial distress and will be unable to pay their liabilities when they are due.
John Hall, the Scottish council member for R3, has called on HMRC to explain its motives in propping up struggling businesses.
He said: "Time to Pay should be used as breathing space for businesses undergoing a time of temporary difficulty.
"However, if a business is on their third or fourth referral that should act as a warning sign; it indicates that there are underlying problems with the business cash flow.
"It should make HMRC question the financial viability of that business."
HMRC said it disagreed with R3's assessment of the scheme, claiming around 90 per cent of tax rescheduled for payment has been paid.
R3 said its members are seeing more and more insolvent businesses who had previously benefited from the Time to Pay schemes.
Hall added: "Research shows that one in four corporate insolvencies are caused by another business going into insolvency this is known as the domino effect.
"This means that should the businesses who have had multiple Time to Pay arrangements fail, not only will the Government be left out of pocket, but a considerable number of businesses would be left exposed.
"If a business is able to use the Time to Pay scheme as an alternative credit facility, they are being given an unfair advantage over those businesses who meet their financial obligations in a timely manner."
The government's own figures on Time to Pay show rejection rates are on the rise, with more than 3,300 requests denied in the first three months of 2011 compared to around 2,300 last year.
Agreed schemes have also dropped from 57,800 last year to 32,900 for the same three month period