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surprised snowy owl | accountingweb | Tax debt increase ‘a surprise’ as Time to Pay instalments dip
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Surprising tax-debt increase as Time to Pay dips

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Dawn Register of BDO talks to AccountingWEB about the ‘surprising’ rise in tax debt and also looks at why Time to Pay arrangements are still a positive, despite the numbers falling.

16th Feb 2024
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Overall tax debt rising slightly to £45.7bn comes as a surprise, according to BDO’s head of tax dispute resolution Dawn Register. She sees HMRC’s need for investment as part of the problem and thinks Time to Pay arrangements are still a good thing, despite the numbers falling.

New figures from HMRC’s latest performance update show that during the final quarter of 2023 – against the previous quarter – the tax debt figure was up by 0.4%, representing the second consecutive quarterly increase.

Meanwhile, the number of taxpayers in Time to Pay arrangements dropped 9% on a quarter-by-quarter basis to 808,025.

Surprising figures

Register told AccountingWEB that the figures are “surprising”.

“If you think about the wider economy, the cost of living and the fact that people have just filed their personal tax returns to 31 January, you would expect that a lot of people in that quarter – so October, November and December – would be asking for time to pay from HMRC.

“We would have expected [Time to Pay arrangements] to have gone up.”

Register also added that HMRC “have actually made it easier to make the instalment arrangement of relatively small amounts”.

“You would think people would be taking advantage of that a bit; it could be a lack of awareness about it from an education and an HMRC publicity point of view,” she said. “It could also be that there is a kind of ‘head in the sand’ approach when it comes to tax debt. Without personal representation, people are scared to contact HMRC. It’s very common.”

Lack of resources

Register noted that within HMRC though, there is a “lack of resources”.

“I know that’s easy for me to say, because HMRC could probably soak up endless resources, but there’s definitely a need for more. By its nature, tax debt is a sensitive issue and you’ve got a full spectrum of people, all the way through to the very vulnerable who may be in terrible circumstances, who need to speak to a human being; you need understanding, care and compassion, and that is quite a difficult job to tackle.

“At the other end of the spectrum, catching people who are not paying requires a lot of resources, and then dealing with people who need a lot of support and hand-holding also needs a lot of resources.”

Register said it is “not as an insignificant amount of money” needed either and added that pumping more money into the authority was a “no brainer”, with the call coming on the back of a similar move by the Institute of Chartered Accountants in England and Wales (ICAEW) to push for more investment in HMRC.

Time to Pay a ‘good thing’

As for what can be done, Register stressed that advisers can help taxpayers get Time to Pay arrangements, which she called “a good thing generally, in principle”.

“Clearly, it can take away a lot of worry and a lot of stress. It’s good for the Exchequer and it’s good for the taxpayer because ultimately, the full amount is paid – you just get an instalment arrangement. It’s extra time.”

She said that there are “a lot of people out there who desperately want to be good citizens, who want to pay their taxes in full, and they may just have a short-term cashflow problem”.

“You don’t want to push businesses that are viable under. We deal with mid-market businesses and they’re the life and soul of the British economy.”

Replies (11)

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Stepurhan
By stepurhan
16th Feb 2024 12:13

Is the article illustration this Superb Owl I have been hearing about?

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Replying to stepurhan:
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By FactChecker
16th Feb 2024 13:00

It certainly fooled me ... I thought it was illustrating a news story about the Harra - just after he's been told "No, MTD really is dead ... yeah, not joking, that's official"!

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By FactChecker
16th Feb 2024 13:12

But back to the serious ... Register says there are:
“a lot of people out there who desperately want to be good citizens, who want to pay their taxes in full, and they may just have a short-term cashflow problem”.

It's hard to argue with any of those 3 sub-statements - but it's not a description of the substantial majority of taxpayers who find themselves unable (or in some cases merely unwilling) to pay on time.

Delaying payment in the hope of 'good times around the corner' is the mantra (or should I say 'con') belaboured by the loan sharks out there - who don't yet include HMRC amongst their number.

Of course there will be a few people and/or businesses who truly encounter an out-of-the-ordinary event that poses a temporary cashflow problem ... and it is for precisely that purpose that the HMRC TTP scheme came into being.
But broadening that out (let alone promoting it) to those that are merely careless with their planning (or possibly more feckless than that) would be not only unwise for HMRC, but unkind to the hooked taxpayer.

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Replying to FactChecker:
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By johnjenkins
19th Feb 2024 10:25

One thing that nobody has mentioned is the fact that some just can't be bothered and have given up. They see all what is wrong with the UK. Immigrants getting handouts, prices going through the roof, big companies making extortionate profits, scammers not getting caught, the Post Office lying about software etc.etc. The political arena is a farce. HMRC don't even bother answering their phones. People are saying prepare for WW111 but it's already here. East against the West in different guises. No doubt China are staying out at the moment and will step in to pick up the pieces. You wonder why some people can't be bothered to pay their tax bill?

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boxfile
By spilly
16th Feb 2024 23:20

It could just be that people can’t actually sort out a time to pay arrangement.
Client owes for VAT but has never managed to speak to anyone at HMRC who can sort this out, despite multiple phone calls and promises to get the relevant peeps to call back.
They cannot do this online due to poor broadband (based out in the sticks).
It’s almost like HMRC want the business to fail.

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By Kirsty McGregor
19th Feb 2024 10:53

Tell them to write to their MP - HMRC jumped in a case I was involved in when MP got involved & now resolved.

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By Rob Swan
18th Feb 2024 11:07

"...advisers can help taxpayers get Time to Pay arrangements..."
Yes, but many who know they're short of cash will most likely have ditched their advisers - saving cash - and filed their own returns - quite possibly incorrectly - and they are more likely to be burrying their heads. As Register says, it's unexpected. Maybe all really is well? Who knows what horrors lurk behind the apparent facts? Appart, of course, from the mess which is HMRC.

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By Richer Aims
19th Feb 2024 14:21

My own personal experience of trying to get a Time to Pay agreement to cover a PAYE debt of £3,000 due to earning over 100k was 'sorry we don't do those anymore, it was really only during covid. You should have made provision... can't you borrow the money from your family or pay on a credit card'

When I said I didn't expect a tax bill as I worked for the same employer all year and have no other income the response was 'Yeah PAYE doesn't work for people on 100k plus'

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Replying to Richer Aims:
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By Postingcomments
19th Feb 2024 15:22

If you are earning £100k then you really should have a few k of savings.
Also, you have between April and Jan to save up.

I'm not surprised they told you the scheme had been withdrawn - because you were trying to abuse it, waste people's time and ultimately generate a load of costs - and all over a trifling amount. You should have just paid it.

I don't know how the state is meant to administer the various affairs of 70m people when an increasing number think they are a unique snowflake who is entitled to special one to one treatment.

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Replying to Postingcomments:
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By johnjenkins
19th Feb 2024 16:29

So HMRC get your code number wrong and you have to allow for that in your "spend budget"?

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Replying to johnjenkins:
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By FactChecker
20th Feb 2024 21:40

Richer Aims didn't say with whom they had that particular conversation ... but, if it was an HMRC employee, they sound to have been a tad presumptive - whilst also being broadly correct.

TTP is not an 'option' to which any taxpayer can elect whenever it suits them ... it is designed as a safety net for those who *cannot* pay what's due on time.
So, each application is specific to that individual and their circumstances ... within a broad remit of:
"The amount you’ll be asked to pay each month will be based on how much you have left after you pay any rent, food or utility bills and fixed outgoings you have, like subscriptions.
You’ll usually be asked to pay around half of what you have left over each month towards the tax you owe."

It's easy to see how someone on a salary of over £100k might find themselves, were a TTP agreed, paying it all off in only 2 months (which would be a waste, if not abuse, of everyone's time).
That said, I doubt any member of HMRC would've said exactly what Richer Aims quotes so we may not have the full picture anyway.

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