Time To Pay – Update

HM Revenue & Customs’ Time to Pay (TTP) scheme is under scrutiny once again. This time, it has emerged that the taxman has been agreeing multi-million pound TTP arrangements without requiring businesses to undertake independent reviews to check their viability.

Earlier this month, HM Revenue & Customs released its figures on TTP arrangements, and an analysis of the data by industry publication Accountancy Age showed that 140 high-value arrangements (over £100,000 a year) worth £45m were made in June, at an average of £321,000 each. This compares with an average of around £180,000 to £200,000 in each of the previous 15 months.

HM Revenue & Customs has stated that a small number of very high-value arrangements made in June skewed the figures and, if it were not for these, the average would be similar to other months. Research showed that these arrangements would have to be collectively worth around £17m to skew the June average figures to this extent.

Back in 2009, Alistair Darling announced in the Pre-Budget Report that HMRC would require businesses applying for TTP for debts of £1m or over to provide an independent business review (IBR) supporting their request. This involves the businesses appointing insolvency practitioners to review their long-term viability – but a freedom of information request has shown that no IBRs were carried out in June, and only six had been carried out in total between January 2010 and June 2011.

Senior Partner Paul Carvell comments: “HMRC has claimed that an IBR is not always required in £1m+ cases, because each TTP request is considered on its own individual merits and circumstances. However, in light of the taxman’s recent reluctance to agree TTP arrangements with so many struggling businesses, this seems rather an odd situation. It would appear that, for a few large-scale enterprises with outstanding tax liabilities, HMRC is prepared to be more lenient. When you contrast this with the declining number of TTP arrangements made for smaller sums, one has to wonder whether it’s one rule for bigger companies and another for SMEs.”

No More Time To Pay?

Business who are struggling to pay the taxman have been dealt a severe blow by the news that there has been a huge increase in the number of ‘Time to Pay’ (TTP) arrangements being rejected by HM Revenue & Customs.

According to recent figures released by HMRC, 3,390 TTP requests were refused in the first three months of 2011, compared to 2,440 in the same period in 2009 and 2,360 in 2010.

Only 32,900 requests were agreed in the first quarter of this year, compared with 82,000 in 2009 and 57,800 in 2010.

HMRC said that the scheme “continues to be available to help companies address short-term cash flow difficulties that result in an inability to pay their tax in full and on time”. It also claimed that the criteria determining whether arrangements were agreed or rejected had not changed in any way.

However, many professionals (including ourselves) see this as yet another sign of HMRC’s tough new approach towards individuals and businesses who are already struggling in a harsh economic climate. Even requests with secure guarantees are being turned down, and deals are being restricted to payments within three months. Those who have not previously had a TTP arrangement in place are far more likely to have a request accepted than companies that have already been subject to one.

If you are worried about any difficulties with tax payments, it is a good idea to have a plan in place. Talk to one of our experts to find out how we can help you with this. http://www.sfb.uk.com/