Business Payment Support Scheme – a roaring success

The Govt are practicing what they preach - help small business with finance. HMRC are giving a quick, painless and cost effective line of credit to struggling businesses - when they need it.

If some fail after delying payment, then there will be tax lost - but there will be many others who will survive and continue to contribute to (rather than be a drain on) Govt coffers.

Its a good, pragmatic approach - which - from my experience with my clients - produces a lot of goodwill toward HMRC - most unusual!

On a practical level the BPSS scheme seems great for accountants and their clients. If the client doesn't really want to use their overdraft to pay the tax due they just ring up the BPSS and within a few minutes with no evidence of hardship or otherwise the tax payment is delayed. I don't know what guidance the HMRC operatives have been given but so far none of our clients has had a request turned down or even questioned or altered. They simply accept whatever they are told and authorise whatever delay the client suggests! HMRC are intent on bending over backwards to help out struggling businesses.

Meanwhile the less generous HMRC enquiry teams are as dogmatic and picky as ever. This leads to the odd situation whereby the HMRC enquiry teams come along and pick apart a client's books in minute detail, find some payments unsupported by invoices or a round sum allowance paid outside the terms of a dispensation, go back six years, charge penalties and interest. The client then rings up the BPSS and they say 'when would you like to pay it?!'

It all seems a bit contrary to me!

The website makes clear that this scheme is for new cases. But I have a case of a husband and wife partnership who already have a payment arrangement in place, for arrears of personal tax, but need to extend it to include tax due in January. They are being given a hell of a time, and I fear for them, as they are stressed out and afraid they may be bankrupted and lose their home. They are close to retirement age, and their work has all but dried up. Is it reasonable that these tax collectors should be so heavy handed when government policy is apparently to make allowances for people suffering from the downturn.

I have dealt with this department on clients behalf and have had no issues re 64-8 and found the process quick and easy.
But when dealing with any revenue department I have found the easy way to deal with the 64-8 issue is to go straight to the line manager where lost authorities are always found as soon as someone looks.

I recently attempted to make an arrangement with HMRC under the BPSS on behalf of a client using the phone number on the website. I was told that their department only have access to a limited version of the clients tax record, which does not enable them to see whether a 64-8 agent authority has been filed.

The officer that I spoke to indicated that their department would not be able to discuss taxpayers affairs with agents unless the taxpayer was with the agent and could give the necessary authority over the phone.

There is no doubt that the BPSS is a roaring success in terms of helping businesses at a difficult time but is it just going to create greater problems in the future?

Effectively these businesses are borrowing money from the government (in the form of HMRC) instead of their usual sources (banks, owners etc). By definition they are businesses that are already struggling to pay their debts and are therefore high risk. It seems likely that in lending money to risky businesses without any assessment of their future ability to repay, there will be an enormous bad debt risk. There is a high chance that the government will be lending to businesses with no little or no chance of recovery. These businesses will continue in business longer but will go 'bump' owing far more than they would do had they not been offered such 'support'. There is certainly a possibility that such measures will prolong the recession by artificially keeping failing businesses going and racking up bigger deficits (bad debts to other businesses) than would otherwise have been the case.