BusinessBusiness RecoveryInsolvency practitioners to receive £11m boost from new tax rules

Insolvency practitioners to receive £11m boost from new tax rules

Insolvency practitioners lined up for £11m in work from the taxman to help gauge whether big businesses should qualify for a tax deferral

Insolvency practitioners will receive an estimated £11m in extra work after
the taxman announced plans to more strictly monitor requests for large
businesses to defer their tax bill.

HM Revenue & Customs
wants businesses requesting a Time to Pay arrangement for tax deferral of more
than £1m to pay for an independent assessment of their financial strength.

The taxman has struggled to cope with gauging the worthiness of large complex
businesses’ requests for a tax deferral.

An independent business review (IBR) will be undertaken by a qualified
professional adviser, expected to be an insolvency professional, of their
company’s financial strength. Around 250 businesses are expected to require an
IBR.

The likely cost for a business will range from £10,000 to £75,000. The £11m
estimate is based on an average cost of £42,500 per business.

A panel of practitioners will be set up by HMRC to provide an IBR, and
guidance for them will published on its website. The new rules come into effect
from 6 April.

While HMRC acknowledges that the request for an IBR might discourage
businesses in genuine need of help, it expects this to be “minimal”.

R3 president Peter Sargent welcomed HMRC plans: “The panel of insolvency
practitioners will be well placed to conduct the IBRs and provide guidance
regarding the firm’s ability to pay the money back to HMRC.

“We are still concerned by the number of repeat deferrals, which have doubled
in the last six months and it would make sense to introduce some sort of control
for these businesses too.”

Further reading:

HMRC
imposes tougher rules on Time To Pay

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