HMRC imposes tougher rules on Time To Pay

The taxman has said companies must pay for detailed business reviews to be drawn up if they are looking to defer a tax bill of more than £1m.

From 6 April, HMRevenue &Customs wants large companies to shoulder the financial burden of the Independent Business Reviews if they want to secure a time-to-pay arrangement.

The taxman hopes the move will also put off applications from those businesses without a genuine need for the TTP.

The reviews could cost up to £75,000 for the most complex cases. HMRC wants to shift the onus onto companies in order to lighten the heavy workload it faces in processing Time -To Pay requests.

As of last week HMRC estimated 250 businesses a year would need to draw up an IBR.

"For large cases, this requires significant amounts of work by HMRC's limited operational accountancy resource," the taxman has said.

The taxman has said there had been an increase in the number of large time to pay requests, defined as £1m or more, during the last 12 months.

HMRC says the IBRs will ensure that the necessary review of both the businesses ability to pay and longer term viability is "conducted quickly but in sufficient detail to minimise the risk of decisions being made either to grant or withhold TTP inappropriately."

In what represents a hardening of its stance the taxman appears reluctant to give businesses using the TTP an unfair boost compared to those companies who have gone cap in hand to their banks for loans to meet their tax bills.

"In view of the amounts of tax involved and the risks to both businesses and the Exchequer, HMRC needs to ensure that decisions are given quickly, with a robust audit trail, in such a way that prevents advantage to those who seek government support over those who obtain commercial finance to meet their tax obligations by the due date."

Further reading:

HMRC's time-to-pay scheme tops £5bn