Tax & Accounting News

Struggling firms get more time to pay

06/07/2009

Businesses which are finding it difficult to meet their tax bills will in future be offered the chance to spread the cost over a longer period, through a ‘Managed Payment Plan’ (MPP) with HM Revenue and Customs.

The scheme – announced last December – will allow an individual or company to spread tax over a period that can be agreed on a case-by-case basis. Normally this will involve delaying half of the tax due in return for paying the remainder early. For example, someone may agree to pay half of their tax bill three months early, and the other half three months late. Provided an agreement is reached before payment is due, HMRC will not charge interest on the late payment.

The scheme also provides help for individuals who owe income tax of up to £2,000 on their business and are in employment, by allowing them to spread the bill by having it collected in instalments, probably over one year, through the PAYE system.

The downside to both these two elements is that they do not come into practice until April 2011 and April 2012, respectively, which HMRC claim is due to the time it will take to change its computer systems.

Another new rule announced at the same time as the MPP scheme – but which could be in place as soon as July – gives HMRC the power to demand the contact details for a company or individual that is believed to owe it money, from anyone else who HMRC thinks may know their whereabouts. The fine for not doing so is £300. There is certainly no need to waste time ensuring any details are up-to-date, but it would make sense for an individual to pass on what they know, in order to avoid a fine.

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