Businesses offered the chance to rearrange tax payments
13th January 2009
Britain’s businesses will face enough challenges over the coming months without having to worry unduly about their responsibilities to the Treasury. So the government have launched a brand new Business Payment Support Scheme to give worried entrepreneurs some breathing space. It’s called Time to Pay.
There has always been an opportunity of sorts for troubled taxpayers to schedule their repayments to the Revenue. Going to court is an expensive process, even for HMRC, who would rather come to an arrangement out of court if possible. But thanks to the credit crunch, the new scheme means HMRC’s terms have become even more business-favourable.
Now entrepreneurs have the chance to agree a timetable of payments for all centrally collected taxes: PAYE, VAT and National Insurance contributions, as well as corporation and income tax. What’s more, if the application is successful, the taxman will waive all surcharges and penalty payments. The business will just have to pay interest on what is owed.
The Business Payment Support Scheme is designed primarily for businesses which are not already being pursued by HMRC for outstanding debt, so it’s important to make an application sooner rather than later. The department has a mandate to promote the scheme and ensure it is widely used, but if a business is already caught up in the debt collection process, it may be turned down automatically.
The benefits of the scheme are clear. The interest rates payable on delayed tax payments are better than those available from commercial lenders, so if a business is running in the red, as many businesses are, a successful application to schedule its tax repayments will save money.
The current interest rate for deferred tax under the Time to Pay Scheme is a competitive 4.5 per cent. For larger companies, which have underpaid corporation tax installments, it’s only 3 per cent, with a further reduction predicted soon. For VAT, as long as returns are filed on time, there may not be any interest payable at all.
Businesses can apply direct. There’s a new HMRC phoneline dedicated to the matter (the number is 0845 302 1435), and callers are promised a swift decision on their application. However, businesses will need to present their case, and the more complex the application, the longer the process.
We can help you come up with a schedule for all your tax repayments, as well as help to show the taxman that a business is in genuine difficulty, and that while it can’t pay its tax debts right now, it will be able to in the future. If a business does not meet those criteria, HMRC have said the application will fail.