How ‘time to pay’ can work for you
The Business Payment Support Service (BPSS) was launched by HM Revenue and Customs (HMRC) in 2008 to help qualifying businesses and individuals through the economic turmoil.
Commonly referred to as ‘time to pay’, it allows businesses worried about being able to meet tax, National Insurance, VAT or other payments to negotiate a timetable for making them over a longer period.
It’s been successful and was extended by Alistair Darling in the 2009 Budget and, according to HMRC, will run for as long as it’s needed.
However, some companies are now reporting more stringent criteria – a claim denied by HMRC which insists all requests are being assessed on the same basis as when the service was introduced.
Putting this issue aside, if you anticipate you can’t afford to make due payments, you can call HMRC’s Business Payment Support Line seven days a week and staff will discuss temporary options tailored to your needs.
In most cases HMRC has been giving decisions relatively quickly (in as little as ten minutes) and from our experience, companies have been able to comfortably defer up to £100,000 in corporation tax for up to one year. Larger amounts or longer deferments are possible, but usually require some negotiation. For amounts larger than £1m, HMRC are to introduce the requirement for an Independent Business Review. This was announced in the Budget but details have yet to emerge as to how it will work in practice.
For PAYE or VAT, where payments are due monthly or quarterly, HMRC will allow somewhat shorter deferment periods, to avoid large arrears building up.
HMRC does not charge additional late payment surcharges on payments included in the arrangement, although interest will continue to be payable on those taxes where it applies. One thing you do need to consider is that HMRC has just introduced late payment surcharges for PAYE, which was previously exempt from surcharges, so don’t be tempted just to put these payments off by a week or two. It is far better to attempt to agree in advance that these payments can be made over a longer period as part of the BPSS.
The BPSS is likely to be withdrawn once the recovery is underway. There are already plans to introduce a less flexible replacement, the Managed Payment Plan. Although this will allow payments to be spread over a period, it will involve some payments being made before the normal due date as well as after. The new system will require changes in HMRC’s computer systems, and will not be introduced before April 2011. This is likely to be the time when the BPSS will end.