‘Time-To-Pay’ was introduced by former chancellor Alistair Darling in November 2008 as a way of helping those businesses struggling to meet their tax paying duties. The idea was simple: business owners could apply to the Government for special dispensation so that, in effect, they could create their own tax payment timetable. During the recession, it was particularly popular with 240,700 successful applicants in 2009. For many of these businesses it would have been a lifeline allowing them to pay HMRC taxes – including VAT, National Insurance and PAYE – at their own leisure.
New evidence suggests HMRC are becoming far more reluctant to give the green light to new applicants.
In 2009 2.7 per cent of applicants were turned down, but in 2010 that increased to 5.8 per cent. If anecdotal evidence is to be trusted, this year will see an even bigger refusal rate. So, what of suspicions that HMRC could be winding down the scheme? A spokesman for the tax collecting authority said it was business as usual:
“Time to Pay continues to be available to help companies address short term cash flow difficulties that result in an inability to pay their tax in full and on time. HMRC’s criteria for agreeing arrangements have not changed in any way.”
As evidence of this they say that there had been a 60 per cent drop in the number of companies applying to the scheme in 2010 – though this doesn’t explain the increased refusal rate.
Surely, the future of the Time-to-Pay scheme (and the number of accepted applications) should be determined by the state of the economy. During the darkest days of the recession, it was a crucial measure to allow small businesses some leeway on tax deadlines – and a better shot at survival. It would be fair to assume the Government is making an ongoing calculation in this regard. Another period of reverse growth would certainly persuade the Government to stick with it, but if the economy picks up, the Government will surely want to reduce dependency on the scheme.
As things stand, the Revenue is confident of getting back 90 per cent of the deferrals made since the Time-to-Pay began.
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