There was a time when it was fairly easy to agree a time to pay arrangement with HMRC. It was simply a matter of ringing up, asking politely, and the answer was “yes” without too many searching questions.
How times change. It’s probably fair to say that, in the early days, HMRC managed to provide a cash flow boost to businesses that had no particular cash flow problems whilst, at the other extreme, putting off the evil day for a number of hopeless basket cases.
It’s estimated that, since the scheme was introduced in the autumn of 2008, over 400,000 business have benefited from time to pay arrangements, with approaching £7.5bn worth of taxes deferred. According to the most recent figures there’s getting on for £1bn still outstanding, with about two-thirds of that not paid within the initially agreed period.
Certainly anyone asking for an arrangement today can expect far more probing questions than in the past, and those asking for deferrals of very large debts – over £1m – can expect to be asked to go through an independent business review.
Although the overwhelming majority of requests, especially for first-timers, are apparently agreed, the proportion of refusals has increased substantially. And now there’s a fear that time to pay arrangements could be on their way out.
Recently, HMRC announced that, although the scheme is due to run until 2015, they would no longer publish statistics about deferrals after Q2 2011. Does this signal the first step towards phasing out the scheme?
Hot on the tail of that announcement, it’s been revealed that time to pay arrangements will not be agreed for companies that pay dividends, even where those dividends are used as a tax-efficient way of paying remuneration. We could perfectly understand that stance where dividends are used to distribute profits to arm’s length investors, but where they’re paid as part of sensible remuneration planning?
Although HMRC is not a bank, time to pay arrangements have provided a vital lifeline to businesses struggling with temporary difficulties. But are we seeing the beginning of the end?