Almost 14,000 businesses have pleaded for extra time to pay their tax bills, it emerged yesterday, as economists said that Britain was sliding towards the sharpest slowdown since 1947.

The economy is expected to contract sharply next year - at almost twice the rate forecast by Alistair Darling in his Pre-Budget Report last month. About 13,900 companies, many likely to be small and medium-sized businesses, already smarting from higher costs and limited credit, have sought extra time to pay £440 million in tax.

HM Revenue & Customs said that it had been contacted by nearly 23,000 companies since the Chancellor announced in the Pre-Budget Report that the Government would allow businesses extra leeway in paying VAT, corporation tax, excise duty and income tax. So far 10,000 businesses, partnerships and sole traders have been granted more time to pay tax worth nearly £170 million, while nearly 4,000 organisations, which owe a total of £271 million, have had cases referred for further consideration.

All businesses that have applied for more time need not pay any bills until a decision is made. Businesses that are granted permission to pay late will still have to pay 4.5 per cent interest on the outstanding sum, although all surcharges for late payment will be waived.

The Revenue said that no business had yet been turned down. Dave Hartnett, Permanent Secretary, Tax, said: “We will offer this service for as long as it is needed ... because of this economic downturn.”

That downturn is accelerating rapidly, official figures show. Between July and September gross domestic product fell by 0.6 per cent, compared with an initial estimate of a fall of 0.5 per cent. The decline in output in the third quarter was the first since the end of the last recession in 1992, and confirms that the UK economy has almost certainly plunged into recession once more - although this will not be confirmed until figures for the final quarter of 2008 are published next year. The technical definition of a recession is two quarters of negative growth.

Economists are forecasting a dramatic fall in output next year. Capital Economics, the consultancy, expects GDP to fall by 2.5 per cent in 2009 - more than double the Government's worst estimate for economic activity and the sharpest decline in the postwar era. The Government has forecast a more modest decline of between 0.75 per cent and 1.25 per cent next year.

Howard Archer, chief UK and European economist at IHS Global Insight, who has forecast a 2.4 per cent drop in GDP next year, said: “While the revised data still do not show the UK technically into recession yet, we are entering into it big time in the fourth quarter.”

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