Tax & Accounting News

Businesses Benefit from £1 Billion Cash Flow Boost

13/03/2009

More than 60,000 businesses have now agreed time to pay arrangements for tax totalling £1 billion with HM Revenue & Customs (HMRC).

The figures were reported in February by HMRC’s Business Payment Support Service (BPSS), which was launched following Chancellor of the Exchequer Alistair Darling’s Pre-Budget Report on 24 November.

It provides a fast track service that gives businesses and individuals in temporary financial difficulty the opportunity to pay corporation tax, income tax, national insurance contributions, PAYE, VAT and other taxes to a timetable they can afford and without surcharges on payments involved.

HMRC says the majority of businesses have agreed repayment timetables over three to six months. Construction firms account for a quarter of those benefiting from these new arrangements, with many retailers and manufacturers also agreeing affordable payment schedules.

The BPSS helpline is normally able to provide an immediate decision on debts under £10,000, with other criteria including:

• Debts between £10,000 and £1000,000: a similar process applies but applications will be looked at in more detail
• Debts over £100,000: will be referred to the local HMRC office. HMRC has indicated that it is likely to view time to pay proposals of three months or less sympathetically, provided the business provides evidence of financial difficulties.
• Debts over £100,000 and over three months to pay: cases will be judged individually, using evidence including cash flow and management accounts. The case may also be referred to HMRC’s advisory accountant.
• Debts above £500,000: these will be dealt with by specialist offices, typically the Enforcement Office for direct tax and the National Debt Unit for indirect tax.

Harris Lipman’s head of tax Martina Fitzgerald said: “The payment deferrals available through BPSS are certainly worth exploring as they offer businesses a useful opportunity to improve cash flow.

“We are happy to advise clients seeking payment deferral or with other opportunities to improve their cash flow by making arrangements with HMRC, such as making use of losses before statutory accounts are finalised, so that losses can be carried back to set against profits from an earlier period.

“Other potential options include obtaining tax repayments that had been withheld due to ongoing tax enquiries or agreeing time to pay when conceding tax planning issues.”

More information on the BPSS is available at www.hmrc.gov.uk/pbr2008/business-payment.htm and the helpline can be contacted on 0845 302 1435.

For further information or advice, please contact us.

 

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