HMRC Time to pay arrangements - recent developments good news for partnerships - more due diligence
Prior to the Pre Budget Report (PBR) in December, there was speculation that the Business Payments Support Service (BPSS), which provides assistance by agreeing to deferred payments for those businesses facing difficulties, was to be closed. The Pre Budget Report however confirmed the BPSS is to remain in place and more recently, there has been an announcement that the scheme is to be fully extended to partnerships.
The availability of the BPSS for partnerships will be particularly helpful for larger professional partnerships where individual partners have to date been dealt with individually and by different tax offices, leading to the potential for inconsistent treatment. The ability to deal with a single office will be a considerable benefit.
HMRC have reiterated the basic principles underlying the circumstances in which support will be given, the key one being that in their opinion they must be satisfied that the business remains viable. In addition, to obtain support the business must be in genuine difficulty, unable to pay their tax on time and likely to be able to pay their tax given more time.
In the PBR it was announced that in the future, probably from April 2010, HMRC will require an Independent Business Review to be carried out where the debt exceeds £1 million; details of exactly what is to be required have yet to be determined.
Notwithstanding these developments there is a general feeling which is echoed by comments in the press that HMRC are taking a much stricter line when dealing with time to pay applications and more are being refused. Contrary to the guidance given in their manuals, HMRC appear to be demanding more information to support any agreements. In addition, any breaches of agreements previously made are likely to lead to enforcement action being taken by HMRC.
Whilst the above may appear to provide mixed messages, the bottom line appears to be that HMRC will support what they believe to be viable businesses. Applications must be well prepared and realistic, and failure to meet previously agreed schedules is likely to result in termination and institution of recovery proceedings. Should you require assistance in making such applications, or require help approaching HMRC, then please do not hesitate to contact me.
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: 12th January, 2010
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