Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

'Time to Pay' may be scrapped in Budget

by
18th Jun 2010
Save content
Have you found this content useful? Use the button above to save it to your profile.

HMRC has toughened its stance on VAT deferral requests and recent reports suggest ‘Time to Pay’ may be abolished altogether in next week’s Budget.

The average VAT deferral request agreed by HMRC under the ‘Time to Pay’ scheme is £18,840, compared to an average refusal amount of £117,216, according to figures from finance provider Syscap. This means businesses looking to defer more than £19,000 could run into difficulties.

The scheme has seen £5.3bn worth of tax payments successfully deferred since November 2008, helping more than 200,000 businesses ease their cashflow problems.

The previous government extended the facility by a further four years, but it could be axed in next week's Budget as part of a public spending cull to tackle the public deficit, according to the Forum of Private Business (FPB).

"The Business Payment Support Scheme remains a real lifeline for many small firms struggling with cashflow and this will be the case for a while. Now is not the time for it to go," warned the FPB's head of campaigns Jane Bennett. "Re-balancing the economy is clearly a major priority but sacrificing genuine support like this will only jeopardise small businesses and hinder sustained recovery. The message is clear – it is important to preserve 'time to pay' and other viable small business support schemes in the Budget."

An FPB poll conducted last year saw the scheme voted as the most popular of all the government's business support programmes, and according to the organisation's latest Economy Watch survey, almost 60% of business owners believe HMRC has been supportive in recent months.

This is despite 28% saying that levels of taxation are too steep, 19% reporting that they struggled to speak directly to a HMRC representative and others complaining of problems with making online payments and a lack of payment flexibility.

In all, only 3% of business owners surveyed said they have experienced difficulties in accessing the scheme and just 1% said that HMRC's advice has been inconsistent.

AccountingWEB.co.uk contacted HMRC to ascertain whether 'Time to Pay' is likely to be scrapped in the Budget. An HMRC spokesperson told us: "We cannot speculate on what may or may not be included in the Budget, so can't make a comment".

Tags:

Replies (6)

Please login or register to join the discussion.

By JCresswellTax
17th Jun 2010 17:16

OK for VAT & PAYE

I can understand scrapping time to pay for VAT and PAYE as the money is never really the company's.

They are just acting as a collection agent for HMRC so why should they have time to pay over what isn't theirs in the first place !!

It should stay for CT, Self Assessment etc.

Thanks (0)
avatar
By Chris Wise
18th Jun 2010 10:50

Time to Pay

Its been getting pregressively worse to put one in place for several months

Thanks (0)
avatar
By cymraeg_draig
19th Jun 2010 19:10

Scrapping time to pay

Combined with the refusal of the banks to lend that would be a great way to strangle small businesses and swell the dole queues.

Thanks (0)
avatar
By morgani
20th Jun 2010 19:09

Would they then ever get their money?

Agree with the earlier point regarding PAYE and VAT.  At the moment a lot of small businesses are only able to continue because of time to pay agreements.  If they are no longer offered, with banks not lending businesses may not be able to continue.  Where will HMRC get their money from then? 

Thanks (0)
avatar
By arprice
21st Jun 2010 13:39

‘Time to Pay’ may be scrapped in Budget

Speaking as an insolvency practitioner I would welcome the additional business such a move would generate.  Speaking as a businessman however I think it would be ludicrous and could cause considerable damage to the progress of economic recovery in the UK.

Thanks (0)
avatar
By mikewhit
22nd Jun 2010 09:18

Cash flow

I'm sure businesses would not mind paying interest at BoE base rate on their 'time to pay' VAT owed, since many of them are having to rely on the VAT funds in the bank (Ok, ok 'it's not theirs in the first place') to tide them over when orders suddenly stop or become less frequent.

Thanks (0)