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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Thursday, May 05, 2011

Is Time to Pay getting more difficult?

It seems that there has genuinely been a change at the Business Payment Support Service of HMRC.  

I have been on record over recent months in saying that much of the press about HMRC getting tough was ill founded when it came to Time to Pay (TTP) deals.  It certainly was the case that HMRC were getting very tough on defaulters but we were not experiencing any real issues with putting in place new deals on behalf of clients if the circumstances were sensible.

However recent experience and new statistics are now showing that there has been a change. Not only has the number of actual requests for deals dropped quite dramatically but also the proportion of those requests being refused has risen. In the first quarter of 2009 the number of requests was 82,000, in 2010 this had dropped to 57,800, but for 2011 it was right down to 32,900 … only 40% of two years earlier. At the same time the percentage of those refused has increased from 3% to over 10%!

There is increasing evidence that it is getting harder to get repeat deals, and indeed we have had experience of this first hand, and also longer term deals. Shorter periods now being more palatable to HMRC it seems. In recent case I am aware of a Company Director was told he should pay a Corporation Tax demand on his personal credit card as he had been taken dividends and salary out of his business previously!!

HMRC are quoted as saying there has not been a policy change, and their criteria for arrangements have not changed. However, that is perhaps missing a statement tucked away in the small print of the Budget in March which said that TTP would continue to be available to “viable businesses experiencing temporary financial difficulty”. That is a long way from Alastair Darlings statement in November 2008 when he launched the scheme to “enable firms facing difficulties to spread their tax on a timetable they can afford”. How HMRC can establish if a business is viable and their difficulties are temporary is beyond me …but if that is not a policy change I am not sure what is!

The concern is that if this is evidence of a change then is it likely to have an impact on the continuing viability of what is undoubtedly a lot of very fragile smaller businesses in the UK.

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