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Venturn HMRC Time to Pay arrangements.

Being in arrears with HMRC, either with PAYE, NI, VAT or Corporation Tax, isn’t a good place to be.

When you have HMRC arrears, it’s a sure sign of financial distress within your business, and let’s face it, HMRC isn’t operational cash that helps to generate new sales. They are therefore usually one of the first places that companies go to when they have to make difficult choices of who they don’t pay.

In November 2008, HMRC in the UK started to give unprecedented amounts of leniency to companies who were struggling with cash flow under a programme called the Business Payment Support Service (BPSS). This was part of the governments way of helping companies stay solvent and it has to be said that it worked as despite that fact that we have experienced the worst recession of the past century, the aftermath hasn’t been felt in the number of companies filing for Administration or Liquidation (see insolvency statistics).

By July 2009, HMRC had agreed to £3.1bn in deferred payments with 177,000 companies under agreements called “Time To Pay (TTP)” arrangements (see further info). In December 2009, Alistair Darling extended the programme until 5 April 2011 but did state that when the HMRC annual tax bill exceeds £1m, then an Independent Business Review (IBR) will be required to validate the proposal. By March 2010, the amount of debt effectively lent by HMRC had risen to over £5bn. However, since that time, there’s been a blackout of information that could be a sign that the taxman is tightening up their BPSS policy which some now argue was too relaxed.

It’s generally agreed amongst the turnaround community that the BPSS ended in November 2009. Since that time, it’s been much more difficult to obtain and agree a TTP. HMRC are notoriously difficult to deal with and each person’s experience varies according to who they manage to get to speak to.

Finally, you should note that when dealing with HMRC, you are talking to the single largest contributor to winding up petitions in the UK. 40% of all winding up petitions are created by HMRC. In the past 15 years, I’ve fought off a number of threats of HMRC winding up petitions and to date, they not wound up one of my clients.

For further information, see our article "HMRC Top Tips on dealing with Time to Pay Cash flow issues"

Further reading

Stephen Moon, Venturn Ltd. April 2010

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