HMRC’s latest Freedom of Information Act request has highlighted what many may have already suspected: payment plans for tax debts are crucial for allowing many companies to continue trading.
Unfortunately, not all businesses are able to secure such payment plans, and those that do often find themselves lumbered with plans that they find impossible to adhere to.
If these payment plans are so beneficial to UK businesses though, why are HMRC seemingly so resistant to hand them out?
HMRC aren’t there to save businesses
While some may wonder why HMRC don’t offer monthly payment plans as standard, it’s important to remember that HMRC’s primary goal is to retrieve taxes from businesses, rather than to help them.
If a business that’s behind on its tax payments is given longer to trade, the extra time provides opportunity to accrue an even larger debt over time. This is obviously something that HMRC want to avoid whenever possible.
HMRC do have a payment plan scheme that they can offer: a Time to Pay arrangement (TTP), but don’t hand them out freely. The ones they do offer, meanwhile, are often on unattractive terms.
Making the effort to arrange a TTP is a good sign
We’ve all encountered business owners that make us question how on Earth they manage to run their companies. For all the directors that look into the possibility of a TTP, there are many others that lack the urgency or proactivity to do so.
This helps HMRC to maintain a strong TTP completion rate of 90%, with only 10% defaulting. They look for assurances and signs that any tax debts haven’t been run up just out of carelessness, but that circumstances have made things difficult, and things are likely to improve in the future.
HMRC don’t make it easy
Even if you’re a proactive director that’s contacted HMRC at the very first sign of trouble, there’s still no guarantee that you’ll be able to secure a good payment plan, or even one at all. We’ve encountered a few businesses that have managed to arrange a TTP themsleves but found themselves lumbered with unmanageable payments to make over too short a period.
It’s worth instructing a specialist to negotiate a plan for you
HMRC Negotiation Specialist, Nicholas Troth strongly recommends that directors look for help with any TTP application “it can be done yourself”, he explains, “but that’s not to say that you necessarily should”.
“We have many directors coming to us with TTPs they’ve arranged that doesn’t help them at all. A good specialist will be able to ascertain how much you can afford to pay and secure a deal that’s easy to keep to”.
“Every situation is different, and while standard TTPs will span 12 months, we’ve also been able to negotiate plans that give the director 18, 24, 30 months or on occasion, even longer to pay”.
“We’ve built a strong relationship with HMRC over the years and know exactly what they’re looking for when considering offering TTPs. As a good payment plan is often the difference between a company thriving or folding, it’s imperative that directors receive the best deal they possibly can”.
Think your company might benefit from an HMRC Time to Pay arrangement?
We specialise in helping businesses to navigate difficult situations. Unwieldly tax debts are a common issue, and Forbes Burton’s specialist Time to Pay negotiation team have helped countless businesses to handle them.
As business rescue specialists, we’ll provide the best possible solution to any issues your company might be having. Call us on 0808 280 6038, or email advice@forbesburton.com for a free consultation.
