Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

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Friday, June 11, 2010

The end is nigh for Time to Pay?

We’re all aware that the most pressing priority of the new coalition Government is to deal with the country’s massive deficit and ahead of the June 22nd Emergency Budget speculation is rife about what schemes will be axed to help achieve this.

We at Insight have been singing the praises of the HMRC ‘Time to Pay scheme’ for some time now and many businesses have enjoyed the benefit of deferring tax payments of more than £5bn in total on ‘agreed terms’ rather than facing hefty late payment penalties when they can’t pay. Indeed we have used the scheme through the Business Payment Support Service very successfully for a number of clients.

In a recent survey of SME senior decision makers, 30% said they expect HMRC to withdraw the scheme with a further 31% believing it would continue for existing users only.

With many businesses relying on Time to Pay as a ‘secondary banking facility’ to ease an otherwise difficult cashflow, one thing that is clear is any withdrawal of this service may have serious repercussions which could result in terminal insolvency for many businesses. It is critical that if the scheme is withdrawn or reduced in scope it is done very carefully indeed.

One of our key areas of expertise at Insight is the management and improvement of cash flows and reducing businesses financial risk. Get in touch if we can help in anyway.

4 comments:

  1. I am not sure we agree with your title premise Garry!

    This week alone we have three examples of continuing "soft support" from HMRC.

    A potential Newcastle based CVA client informed us yesterday that it owes £56,000 for PAYE. They were offered a time to pay deal of £2,000 per month; thats 28 months to pay!

    Another Glasgow based company owes £24,000 and HMRC Scotland agreed that it could repay at £200 per month until further notice!

    Finally, a Heathrow based company owing PAYE and VAT of £980,000 was offered 2 years to pay.

    Although we are seeing more bailiff visits and winding up petitions being initiated by the tax collectors, this seems to be where one or more deals have failed.

    It wil indeed be interesting to see what a conservative led government will do about the scheme?

    ReplyDelete
  2. Thanks for this Keith!

    There was deliberately a question mark at the end of the title!

    The scheme is certainly still very much alive and in operation, the issue is will the new Government break the pledge from the previous Administration that it will run until at least the end of this Parliament?

    I have also recently read this press release which again adds to that concern ...

    Fear for small business’ survival looms as the Time-To-Pay tax deferment scheme could come to an end.

    Business groups worry that scrapping the scheme, which is rumoured to be announced in the emergency budget this month, could result in tens of thousands of small businesses going bust.

    It has been suggested that the Government are considering this move, due to the large amount of overdue tax payments. Michael Goldstein, audit partner at accountancy firm, BDO Stoy Hayward, believes there is no doubt the Revenue has been a secondary banker to some businesses, “but it cannot continue forever. As the new Government begins to deal with the deficit there is a desire to collect and they must be looking to close it down.”

    However, a number of business groups disagree. The Forum of Private Business (FPB) stated that it would fight any moves to abolish the scheme. Chris Gorman, spokesperson for the FPB commented: “Time-to-pay has been a massive to help to smaller businesses through recession. Our research found it is easily the most popular government support scheme among our members, 66% of business owners said they wanted to see it either increased or retained.”

    Stephen Alambritis, chief spokesperson for the Federation of Small Businesses (FSB) said: “Some 200,000 businesses have signalled that they still require time-to-pay, and of these 10% may be unable to carry on if the scheme were withdrawn.”

    What will 22 June bring?

    ReplyDelete
  3. I made an application for time to pay our outstanding 2009/10 PAYE last Tuesday (15th June) and was told I would receive a decision same day. I'm still waiting for a call back, despite several calls to request a response. I wonder if they're also waiting till Tuesday?

    ReplyDelete
  4. Hi ...if you want to call me I would be happy to discuss your situation. Their service commitment is that they should get back to you much quicker than that.

    ReplyDelete

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