Paying tax has been identified as the number one concern of solicitors hit by the credit crunch. Late incoming payments from third parties are making the problem worse, according to an online survey by the Law Society. Most firms said private clients were not paying their bills on time, which affected firms’ cashflow and therefore their ability to meet their tax returns.

Most respondents thought they would benefit from the 3-12 month tax deferrals that HMRC is offering through its Business Payment Support Service.

The survey also found overwhelming support for a return to a cash basis of accounting for small firms with annual turnover from £150,000 to £1m. In addition, a high proportion of firms said they relied on bank loans to bridge the gap between income and outgoings. Less than half of respondents had encountered problems getting a bank loan.

Most of the survey responses came from sole practitioners and small partnerships in mixed civil practices outside London.