Fall In Time To Pay Agreements As Taxman Gets Tough

New Figures Highlight Changing Trends

23.08.2011

A continued fall in the number of businesses in Yorkshire and the Humber allowed to defer tax payments shows that HMRC is now taking a tougher line with late payers, says insolvency trade body R3.

Figures from HMRC show that in the six months to the end of July, 3,660 businesses in the region were allowed to defer tax to the value of £61 million under the Time to Pay scheme.  Since the scheme started in November 2008, a total of 33,400 Time to Pay agreements have been made in Yorkshire and the Humber with a total value of £550 million.  However, the number and value of arrangements has been falling since 2009.

Andrew Walker, chair of R3 in Yorkshire and partner at Irwin Mitchell, explains: “The Time to Pay scheme has in many cases provided a valuable breathing space for struggling companies, however it has also been responsible for keeping a lot of zombie businesses artificially alive.

“The continued decline in the number and value of arrangements shows that the taxman is now taking a much tougher stance. This is backed up by the recent sharp rise in company liquidations which indicates that HMRC is now stepping in to wind up companies that have been given time to pay and still not done so, or late payers without agreements in place.

“Companies with cash flow problems should be aware that they can no longer rely on deferring their tax bill as a survival strategy, but must seek professional advice to get their house in order.”

HMRC has announced that these latest Time to Pay figures are the last ones that will be released.  Andrew Walker adds: “We are concerned that going forward HMRC will no longer publish these figures as we believe it is in the public interest to do so.”