Business arrears to HMRC are running at an average of £28bn per month, as companies grapple with rising National Insurance (NI) costs and economic shockwaves from US tariff increases.

Official figures, obtained by HMRC under the Freedom of Information (FOI) Act have revealed the extent of unpaid debts being pursued by the taxman across Q1 2025.

Corporation Tax debt arrears are at an average of £7bn per month; £7,527m in January, £7142 in February and £6,794m in March. Unpaid VAT liabilities stood at an average of £12bn per month; 12,554m in January, £12,588 in February and £11,977 in March.

Meanwhile late PAYE payments, which include National Insurance (NI) contributions averaged at £8bn per month; £8,718 in January, £8518 in February and £8,166m in March.

Jason Kurtz, CEO, Basware said: “Our systems are detecting a substantial spike in invoice rejections as businesses scramble to renegotiate contracts, many shell-shocked by tariff trauma of the last few weeks. 

In response to the economic turbulence, its likely companies are stockpiling their reserves and putting off paying tax liabilities in an effort to preserve cashflows. 

He added: “What’s concerning is that economic turbulence also creates fertile ground for fraud, with businesses falling victim to payment fraud schemes including vendor impersonation, duplicate invoices, and manipulated payment details.

Late payments, especially those to organisations like HMRC, have a genuine impact on the supply chain and wider public services. It’s vital that organisations they have rigorous AI-enabled visibility into all their accounts payable operations, to spot rogue invoices and ensure all financial liabilities are paid on time and in full.”

Greg Watson, CEO, Napier AI said: “Increased economic uncertainty and volatility, which is being driven by global macro events like fluctuating tariffs, is creating opportunity for increased financial crime. Some companies, for example, are set up purely to commit financial crime, and funnel illicit funds through the cracks until it’s too late.

There needs to be increased scrutiny from institutions that are enabling businesses with financial services. Many of whom have passed rigorous due diligence checks at the time of onboarding. These institutions need to be doing ongoing monitoring for suspicious activity, using AI to detect anomalies. If we only catch it once the tax is overdue, we’ve already missed the opportunity to prevent financial crime in real-time, at its source.”

An HMRC spokesperson said: “We take a supportive approach to dealing with customers who have tax debts, working with them to find the best possible solution based on their financial circumstances.”