Meeting the cash requirements of RTI
The submission of Real Time Information (RTI) about payroll tax deductions, introduced by HM Revenue & Customs and made mandatory from 6 April 2013, is here to stay. HMRC now has significant payroll information about both employers and employees, and it is much better placed than before in knowing what payroll deductions it should be receiving and when.
RTI will undoubtedly prove to be a boon to the Treasury’s coffers, allowing HMRC to identify amounts due for PAYE and NI deductions much sooner. The ability to hold back deductions and the opportunity for delaying the disclosure of payments have been significantly reduced.
Our Insolvency Issues newsletter covers the challenges facing businesses that seek to fund their operations using Crown debt; HMRC‘s amendments to, and guidance about, the RTI regime; and a summary of HMRC’s preferred remedy of distraint where Crown debt remains unpaid.
Our experience is that many businesses that have faced financial pressures in meeting payments to creditors have used Crown debt as a source of finance. In future, alternative sources of working capital will have to be found and management must anticipate Crown debt being paid when due. This will inevitably put pressure on lenders and on supplier credit limits.
Businesses that are unable to raise the additional capital, bank facilities or alternative funding may need to take more drastic steps and restructure their business. If this appears likely, urgent action is necessary. The chances of rescuing a viable business improve considerably with foresight and early action.
As has always been the case, cash to fund working capital is paramount and planning for funding requirements with short and long term budgets and cash flow forecasts is essential.
Let us know if you need our help.
Date: 19th December, 2013
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