Time to Pay arrangements - rejections continue to rise
HMRC recently issued statistics for the Business Payment Support Service for the three months ended March 2011, their headlines, as you would expect, are the level of support they have provided to date and the reducing level of applications received since the scheme was introduced at the end of 2008.
A closer investigation of the statistics highlights an ever increasing level of applications being refused. During 2009 approximately 240,000 applications were received of which only 2.7% were declined. In 2010 the figures were 139,000 and 6.0% respectively, whilst the figures for the three months to March 2011 are 33,000 and 10.1%. Perhaps the most worrying statistics are revealed when one compares the first three months of this year to those of 2009 and 2010 with the number of rejections for the current year being 3,400 compared to 2,440 in 2009 and 2,369 in 2010, despite a 60% drop in the number of arrangements being applied for. There is no doubt that the trend is an increasing rate of rejection.
Notwithstanding this increase in the level of rejections, HMRC maintain that their criteria for considering applications has not changed since the inception of the scheme. They will support what, in their view, is a viable business. The reality appears to be that, when considering applications, they are requesting more detailed information which highlights concerns which would not have been apparent from a more cursory glance. Inevitably this has led to and will continue to lead to an increase in the rates of rejection.
Despite the increased rates of rejection there does appear to be a future for the Business Payments Support Scheme, HMRC continue to reaffirm that there is no intention to close it down. Realistically, however, gaining acceptance of an arrangement will continue to become tougher as HMRC carry out more thorough investigations into the viability of the applicants and not unreasonably wish to satisfy themselves that they are the bank of last resort and not simply a cheap form of finance.
If you are going to maximise your chance of success, be prepared, make sure your application withstands scrutiny by HMRC. Ensure the application demonstrates the viability of the business going forward and that you have exhausted alternative funding opportunities. Any inconsistencies highlighted by HMRC will impact on the overall credibility of the proposal. There can be real benefits in obtaining an independent review prior to submission to HMRC to maximise the chance of obtaining what may be a last lifeline for the company.
Peter Godfrey-Evans is a Restructuring & Insolvency partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Peter you can call him on 01908 605552.
Date: 10th May, 2011
Articles from this Author
25th July, 2014
HMRC increase the pressure to pay tax on time
7th July, 2014
HMRC Demands Security for PAYE/NIC from Employers
31st May, 2013
RTI - HMRC can no longer be the bank of last resort
5th April, 2013
Real Time Information and the cash flow implications
Contact a Partner
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole