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Tuesday, 11 May 2010

Taxman gets tough on time to pay deals

As reported in many papers yesterday and our Blog, the Freedom of Information query, posted by a company called Syscap, revealed that HMRC rejected 11% of all time to pay deals in Q1 of 2010.

This is more than double the 5.3% of rejections in Q1 of 2009, when the scheme was just getting into its stride.

Whilst a striking headline the numbers are possibly misleading, as we don't know how many applications there were in each period.

The message seems to be clear though. HMRC is tightening the noose on Time to Pay deals

  • HMRC has introduced tough new penalties for late payment of PAYE (see this blog)
  • If a company owes over £1m in taxes and asks for time to pay, HMRC may now require independent business reviews costing tens of thousands (from April 2010)
  • More and more applications are being rejected
  • Interest is applied to delayed payments
  • HMRC can send in bailiffs and issue County Court Judgments and Winding Up Petitions
As we keep saying CVA or company voluntary arrangement will avoid all of this risk and get a composition with creditors in place that
  • Reduces amounts due to be paid to creditors
  • Provides breathing space to restructure
  • Kills off employment contracts and allows fast cost reduction
  • phased repayment of creditors over up to 5 years not 6months
  • No need for Independent Business Review
  • Supported by almost all banks
  • Generally will stop winding up petitions by HMRC
KSA expects to see the HMRC getting tougher as time goes by, once the new Government is finally in place we expect further petitions and increase in the use of CCJ's and Bailiffs.

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