Tax deferral agreements fall
Number of agreements between HMRC and businesses to delay tax payments has fallen dramatically
Deferred tax requests agreed by the taxman has significantly declined, according to figures released by HM Revenue & Customs.
The data shows from January to September 2009 there were 196,200 Time to Pay (TTP) arrangements compared with 114,600 for the same period in 2010.
From January to September 2010 there was £1.9bn worth of arrangements approved, compared with £3.4bn for the same period last year.
The amount of TTP requests that have been declined has doubled in the last year. For the period January to September 2010 the taxman declined 5.2% of TTP arrangements, compared with 2.6% for the same period in 2009.
According to Philip White, chief executive of finance provider Syscap, the increase in declined TTPs is a “clear confirmation” HMRC is taking a tougher stance on tax deferrals.
HMRC could be gradually winding down the scheme, added White.
The was no available information on how many businesses requested repeat deferrals, however, Frances Coulson, vice president of insolvency trade body R3, said the amount had “increased considerably”, from September 2009 to early 2010.
“Without new figures, it is impossible to tell how many companies under the Time to Pay banner are severely distressed and at risk of insolvency,” she said.
Coulson added towards the end of last year two thirds of insolvency practitioners had seen companies move from a TTP to a formal insolvency.
“While the majority of companies in Time to Pay surely use this period as a useful breathing space, a worrying minority may be unable to get their house in order,” said Coulson.
Although the arrangement requests are declining Coulson said IPs are predicting an increase in corporate insolvencies next year.