Taxman toughens up on Time to Pay

Businesses hoping to put tax bills on ice are receiving a frostier reception
from HM Revenue & Customs, to the concern of business groups and advisers.

It has emerged that HMRC has knocked back twice the number of Time to Pay
applications compared to last year.

For some time insolvency experts have said the taxman has been taking a
tougher line on Time to Pay arrangements, which allow businesses vital relief
from its tax bills by allowing them to defer payments.

This view appears to have been borne out. A freedom of information request
made by finance providers Syscap found 11% of applications had been rejected in
the first quarter of 2010 compared to 5.3% last year.

HMRC insists it has not hardened its stance but business representatives have
expressed concern. “This is the most important time for small businesses,” said
Stephen Alambritis, business spokes­person for the Federation of Small
Businesses.

“They need cash freed up to buy stock and advertise to take advantage of
improving conditions. We hope that HMRC is not taking a crude view and assuming
that everything is hunky dory when their political masters have told them to be
more helpful through the TTP.”

To 28 March 2010, 310,000 Time to Pay arrangements have been granted since
the scheme began, totalling almost £5.3bn.

But recently the taxman has said companies trying to defer more than £1m
would have to submit an independent business review, suggesting more information
is required, despite the eligibility requirements remaining the same.

Brian Johnson, insolvency partner at HW Fisher, said: “Having granted Time to
Pay arrangements through 2009 based on very little information, HMRC have now
wised up to the folly of that policy. While they were sympathetic, perhaps
overly so, last year, their attitude has clearly hardened this year.”

An HMRC spokesman said: “There have been no changes to HMRC’s eligibility
criteria for agreeing Time to Pay arrangements. Each request is considered on
its own individual merits.”

Further reading:

HMRC
rejects 6000 time-to-pay pleas