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HMRC Debt and Time to Pay Arrangements

Date Added: 25/04/2016  

Many SMEs have cash flow issues at some stage, indeed a survey by a UK recruitment company found that 46% of SMEs surveyed had experienced the serious worry of inadequate cash flow problems at some stage.
In our experience these cash flow problems, whatever the cause (and it might simply be late paying customers, or something more fundamental), can lead to problems in keeping up with Corporation Tax, VAT and PAYE/NI payments to HMRC. If not dealt with quickly, growing and unpaid HMRC Debt can be a real problem.
What to do if you have a growing HMRC Debt problem – Time to Pay
If the problem is caused by a temporary cash flow issue, and some extra breathing space is needed, then a Time to Pay arrangement with HMRC can help. During the 2008 recession, when many businesses were struggling, HMRC set up the Business Payment Support Service (BPSS), whose remit was to take a more sympathetic approach towards businesses struggling to pay HMRC Debt. BPSS formalised the process of Time to Pay arrangements which allow businesses to spread payments over a time period they can afford.
During the recession, requests for Time to Pay Arrangements were looked upon reasonably favourably, and were considered reasonably easy to agree, providing certain conditions were met. Even then, the period of time agreed to make payments only ranged from 3 months to a maximum of 12 months.
However, as the economy emerged from recession, it is true to say that it is getting harder to agree Time to Pay arrangements with HMRC. Businesses do not automatically qualify for Time to Pay any more, even though it was once enough to up the phone to HMRC saying they needed time to pay.
What’s Needed to Get a Time To Pay Agreement Today?
In our experience, HMRC is now looking for:
·         A robust and well thought out plan backed up with a company’s history,
·         financial forecasts and
·         Analytical information that proves it is a viable business and able to settle its arrears within the agreed time period.
·         HMRC also wants to see that directors have explored other options such as securing additional funding.
This level of detail can be time consuming, which is where we come in. Our experience and expertise of dealing with HMRC comes from our experts who exclusively deal with HMRC and are highly skilled at putting detailed Time to Pay proposals together.
The Quicker you Apply, the Better
Although we can assist with a Time to Pay application at any stage, the earlier a company contacts us for help and advice the better. In our experience, acting quickly can help HMRC view a case more favourably, meaning it is more likely they will agree to a Time to proposal.
The Key Things to be Aware of With Time to Pay Agreements
Time to Pay arrangements are a short term solution to help businesses with temporary cash flow issues. They are not there to help potentially insolvent businesses delay the inevitable. Under these circumstances other help and advice is needed. Perhaps a CVA or a fund raising or restructuring plan.
HMRC will only accept proposals from businesses it believes are genuinely viable. You are also less likely to be accepted if your business has a history of regularly requesting Time to Pay. To qualify for Time to Pay, you must prove that your business can comply with the repayment plan as well as being able to keep up to date with your current tax, VAT and PAYE/NI liabilities. Falling behind again will automatically cancel out any agreement and HMRC will take enforcement proceedings.
Recent evidence shows that HMRC are becoming more aggressive in the use of its powers against businesses that fail to keep up with payments, including asset seizure, winding up petitions and director disqualification proceedings.
If Your Business Has HMRC Debt Problems, Contact Us for Help with Time to Pay
Seeking advice from 4R Business Recovery at an early stage will help avoid these problems. We can assist with solutions – such as Time to Pay – that will help directors of SMEs to stay in control, and aid the recovery of their business. Contact us or call us on 0800 038 5140 for a free initial discussion.

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