Top 50 law firms size up HMRC scheme to allow businesses to spread out their tax bills

Hammonds and DLA Piper are among a number of top 50 law firms considering spreading their July tax bill out over a number of months to boost short-term cash flow.

The firms are considering applying to HM Revenue & Customs to pay the biannual tax bill, due 31 July, over monthly installments over up to six months. They could be eligible for the HMRC scheme because their profits have dropped over the last year – although each firm applying to HRMC will be assessed on a case-by-case basis.

Hammonds and DLA Piper are among the firms yet to make a decision, while others, such as Macfarlanes and Eversheds have ruled it out for this tax year, but would consider future arrangements to pay tax bills in installments.

To sign up to the scheme firms are charged around 2.5% interest on their tax bill.

News comes after Barclays, one of the UK's most active law firm lenders, recently looked at introducing a short-term debt product to help firms struggling with cash flow to pay their VAT and professional indemnity fees, which were due in January.

Hammonds financial director Chris West said of the scheme: "Our tax advisers are aware of the scheme and are looking into it. No decision has been made yet, but if a firm can keep money in its bank account, it is an attractive option to consider."

A finance director at one top 10 firm said: "We are always looking at any way of staggering payments as it is better to have cash in the business. If it is more cost effective than the rate we get at the bank on the money, we will consider it very carefully."