Don't become reliant on "Time to Pay"
Recent figures from HMRC show the taxman is rejecting more requests for arrangements under the Business Payment Support Service (BPSS), where under pressure companies are allowed to defer some of their tax payments.
The consensus view in the business world is that the decrease in arrangements is due to fears BPSS, also known as Time to Pay, is being used to prop up doomed firms.
That means it’s more important than ever for struggling businesses to break their dependency on this government credit line, before they too are deemed to be past the point of no return.
Launched in 2008, and extended to continue until 2015 in last year's budget, Time to Pay is designed to meet the needs of all businesses and individuals experiencing difficulties in paying the tax due in full and on time and some £2.5bllion of tax has been deferred so far.
However, HMRC has explained that in circumstances where organisations are coming back to them time and time again, it will ask more detailed questions as to why they are making repeated requests. It believes businesses making numerous requests will have to work harder to convince them it is a viable company, and that tax deferral is the right option for them.
That’s understandable, HMRC was never designed to be a credit line for businesses and the Time to Pay scheme will end eventually as the economy recovers. For many businesses using Time to Pay repeatedly, withdrawal of support would be a devastating blow.
My advice to businesses is to ensure they continue to make tax payments on time. If they do require HMRC support, they should be doing everything in their power to demonstrate they are a viable business and get up to date with payments as soon as possible.
Moore & Smalley Accountants