Tax experts are looking ahead to the VAT rise scheduled for January and predicting the effect this will have on businesses who are currently struggling to pay on time. Finance provider Syscap have obtained figures which show that there was a 16% drop in the value of ‘Time to Pay’ agreements over this past quarter.
It would also appear that HMRC are making the terms more difficult for firms applying for ‘Time to Pay’. While many are “simply being refused”, HMRC are also responding with shorter repayment terms – gone are the twelve month plans of 2009 – and HMRC are even going as far as suggesting alternative credit as a means of settling the bill before agreeing to a repayment plan. All of these signs point towards the ‘Time to Pay’ scheme effectively being wound down by HMRC.
Speaking to Contractor UK, Syscap’s Phillip White commented: “The winding down of the ‘Time to pay’ scheme is clearly bad news for businesses that need to keep as much cash back for day-to-day working capital purposes as possible. If businesses are worried that they may not have the cash to pay their tax bill they can longer rely on HMRC being flexible – they need to make alternative arrangements.”
Mr White concluded: “The worst thing that could happen is that a business applies under ‘Time to pay’, gets rejected, and is left in the lurch. We suspect that is now going to happen more frequently.”