TaxCorporate TaxDeparting R3 head warns HMRC’s Time to Pay is abused

Departing R3 head warns HMRC's Time to Pay is abused

R3's departing Yorkshire chairman warns that HMRC Time to Pay tax arrears scheme is being abused

HMRC will be lucky to collect 75% of the arrears built up in the Time to Pay
scheme, according to
R3‘s
departing Yorkshire chairman.

Andy Wood, also a partner at the P&A Partnership, told the
Yorkshire
Post
that the taxman was more likely to recoup three-quarters
of its tax arrears for businesses that used the scheme, compared to its 90%
estimate.

Wood also raised concerns about the scheme being abused.

“I had a director say to me ‘of course I was going to use that. I had a
personal guarantee, I needed to get the bank (debt] down’. I don’t think he was
even worried about the taxman,” said Wood.

“Many accountants said to me all they had to do was phone up and say ‘I have
got a client who can’t pay his VAT, can we have some type of arrears’ and it was
done on a phone call,” he added.

HMRC
told the Post that officials were responsible for making decisions on offering
TTP, based on the individual circumstances of the claim.

The taxman has also been more likely to turn down TTP requests. A recent
survey found 11% of applications were turned down in Q1 2010, compared to 5.3% a
year earlier.

HMRC is set to use a panel of insolvency practitioners to provide independent
reviews of larger businesses that are applying for a TTP extension.

By 28 March 2010, HMRC had agreed 310,000 TTP arrangements, deferring almost
£5.3bn in tax.

Further reading:

Taxman
toughens up on Time to Pay

Budget
2010: Warning as Time to Pay scheme is extended

HMRC
imposes tougher rules on Time To Pay

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