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HMRC Fast Track Time To Pay Scheme Under Threat
Author : Derek Cooper
The government's tax and VAT Time to Pay scheme designed to help companies with their cash flow during the recession, may be more difficult to use if the business support centre is closed.
Alistair Darling announced the HM Revenue and Customs (HMRC) Time to Pay scheme in November 2008. The scheme enables companies to defer their corporation tax and VAT bills and is designed to help businesses with their cash flow during the recession. So far according to HMRC figures, it has helped up to 150,000 businesses delay the payment of their tax.
The scheme has been operated through a dedicated business support centre. Directors have been able to contact the support line and agree their requirement over the phone. Generally an agreement to defer the payment of tax for a 3 to 6 month period could be agreed without a lengthy investigation into the company's circumstances.
Unfortunately for many small businesses, it seems that this fast track system may be short lived. If industry rumours are to be believed, the fast track service may be closed by 31st December 2009.
There are a number of possible reasons for this change. However, it seems likely that as the government's own coffers become increasingly bare, there is a need to make sure that where tax is due and can be paid, it is paid on time.
There is no suggestion that the Time to Pay scheme is due to be scrapped all together. However, it seems that companies will have to go through a far more rigorous assessment regarding why they need to defer the payment of tax and over what period this deferment will last.
This change would not be good news for some companies which under greater scrutiny will not be eligible to take advantage of the scheme. However, on reflection, it may not be such a bad thing for the wider economy. One of the criticisms of the Time to Pay scheme has always been the very real possibility that the company will not be in any better financial position at the end of the deferment period. As a result it will still not be able to pay the tax and VAT owed. The scheme has thus simply resulted in a deferment of the business being declared insolvent and facing liquidation.
If the suggested changes to the way the Time to Pay scheme operates mean that companies which were always doomed to fail are not given a deferment period, this may be an improvement. Problems will have to be tackled face on rather than swept under the carpet and left to get worse.
However, following a tightening of the rules, it is inevitable that business which should be given help may face delays in receiving this. As a result they may too be forced into liquidation thus making a mockery of the scheme. Whatever the outcome of the changes, it seems likely that the number of business insolvencies will continue to increase into 2010.
Author's Resource Box
Derek Cooper is Managing Director of Cooper Matthews Limited and a member of
the Turnaround Management Association UK.
More information about solving business difficulties on our website at http://coopermatthews.com/business-recovery-services-advice.html
Prior to Cooper Matthews Derek Cooper was the Managing Director of Wilson Philips specializing in personal insolvency and financial restructuring. He previously worked for 11 years as a financial advisor for Allied Dunbar, and later the J Rothschild Partnership. Dereks experience of both corporate insolvency and business management puts him in a position to be able to understand the challenges facing businesses in todays economic environment.
Article Source:
Articlebliss
Tags: Insolvency, taxes, business turnaround, business bankruptcy
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Submitted : 2009-12-16 Word Count : 583 Popularity: 14 Times Viewed: 11
