Taxman gets tough over Time to Pay
HMRC is getting tough with cash-strapped companies in the UK’s East Anglia region that are struggling to pay tax bills.
There is evidence that HMRC is cracking down on late payers. They are also stepping in to wind up companies that are serial defaulters or pay late without agreements in place.
A continued fall in the number of East Anglia businesses allowed to defer tax payments shows that HMRC is 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, 4730 businesses in the East of England were allowed to defer tax to the value of £77 million under the Time to Pay scheme.
Since the scheme started in November 2008, a total of 41,400 Time to Pay agreements have been made in the region, with a total value of £690 million. But the number and value of arrangements have been falling since 2009. Shay Lettice, the regional R3 chair and a partner at Cambridge accountancy firm Peters Elworthy & Moore, said: “The Time to Pay scheme has, in many cases, provided a valuable breathing space for struggling companies, though it has also been responsible for keeping afloat zombie companies which may never meet their borrowing commitments. “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 which have continually defaulted on tax payments, or late payers without agreements in place. “Companies with cashflow problems should be aware they can no longer rely on deferring their tax bill as a survival strategy, but must seek professional advice to get their affairs in order.” HMRC has announced that these latest Time to Pay figures are the last ones that will be released. Lettice added: “R3 is concerned that HMRC will no longer publish these statistics as we believe it is in the public interest to do so.”
• PHOTOGRAPH SHOWS: Shay Lettice, partner at Peters Elworthy & Moore