£650 Million Worth Of ‘Time To Pay’ Arrangements Are Failing Insolvency Expert Comments On New Figures 20.06.2011 Recent ‘Time to Pay’ figures show that arrangements totalling £650 million remain unpaid.Of the £970 million still due for payment, around £320 million is on track to be paid in the future but £650 million, which equates to more than two thirds, has not been paid as initially agreed. In fact, R3, the insolvency trade body understands that some businesses are on their fourth referral period. These figures indicate that a significant number of the businesses in Time to Pay arrangements are in financial distress and will be unable to pay their liabilities when they fall due.Andrew Walker, chair of R3 in Yorkshire and partner at Irwin Mitchell, comments: “Time to Pay has played a vital role in preventing the spike in corporate insolvency numbers that usually follow the end of a recession, however these figures give rise to serious concerns about the way the scheme is operating. Time to Pay should be used as breathing space for businesses undergoing a time of temporary difficulty. However, if a business is on its third or fourth referral that should act as a warning sign; it indicates that there are underlying problems with the business’ cash flow. It should make HMRC question the financial viability of that business.”R3 members are seeing more and more insolvent businesses which had previously been in Time to Pay schemes. Walker continues: “Research shows that one in four corporate insolvencies are caused by another business going into insolvency – this is known as the domino effect. This means that should the businesses who have had multiple Time to Pay arrangements fail, not only will the Government be left out of pocket, but a considerable number of businesses would be left exposed. Businesses should be properly assessed at the outset to ensure that they are using the scheme appropriately and not as a long-term credit facility. “If a business is able to use the Time to Pay scheme as an alternative credit facility, they are being given an unfair advantage over those businesses who meet their financial obligations in a timely manner. “The definition of insolvency is being unable to pay debts when they fall due, therefore, I would advise those businesses who are undertaking repeat Time to Pay arrangements, to seek professional advice.” Press contact Dave Grimshaw Press Officer 0114 274 4397 Email Dave Related articles 20.03.2019Government Issues Recommendation for Leasehold Reform 15.03.2019Irwin Mitchell Recruits Hundreds Of Volunteers For Red Nose Day 2019 15.03.2019Irwin Mitchell Scoops Hat-trick At Birmingham Law Society Legal Awards 13.03.2019Sheffield City Region Launches Global Innovation Corridor At MIPIM 2019 08.03.2019Irwin Mitchell Launches Women in Law Timeline 05.03.2019Does A Rest Break At Work Have To Be Continuous?