It’s not often that the government offers businesses help with finances but in the Pre-budget Statement Gordon Brown introduced some welcome assistance for cash strapped businesses called “Time to Pay”.

No surcharges or penalties
Business owners who are worried about finding cash to meet their tax liabilities can now schedule their payments over up to 12 months with this new facility. Entrepreneurs have the chance to agree a timetable of payments for PAYE, VAT and National Insurance contributions, as well as corporation and income tax.  If the application is successful, HM Revenue and Customs (HMRC) will waive all surcharges and penalty payments.  You just have to pay interest on what you owe.

Do it now…
Agreeing a payment plan prior to the payment date is important as the scheme is designed primarily for businesses which are not already being pursued by HMRC for outstanding debt, so it’s important to make an application sooner rather than later.  The department has a mandate to promote the scheme and ensure it is widely used, but if you are already caught up in the debt collection process you may be turned down automatically (if you are in this situation, you need to talk to us right away). Going to court is an expensive process, even for HMRC, who would rather come to an arrangement out of court if possible.  There has always been an opportunity of sorts for troubled taxpayers to spread their payments and this can still be used as a last resort.

Attractive interest rates
A successful application will save you money so any business in overdraft should be considering it.

• The current interest rate for deferred tax under the Time to Pay Scheme is a competitive 3.5%
• For larger companies, which have underpaid corporation tax instalments, it’s only 2.75%, with a further reduction predicted soon.
• For VAT, as long as you file your returns on time, there may not be any interest payable at all.

Help with your application
For an application to be successful you need to consider carefully how to fund your tax payments and show HMRC that your business is in genuine difficulty.  It is important to plan your cash flow carefully because if you default on the agreed schedule you will be liable for penalties again.

Simpkins Edwards can help you come up with a schedule for all your tax payments, as well as help you negotiate with the taxman. We have helped many business owners with applications which can be tailored to suit each individual case.  Contact us for further information