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Breathing space
Page 28
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A new Government scheme allowing more time to pay tax arrears could prove a lifeline for small operators.
Words: Paula Talton
Transport firms feeling the effects of the economic downturn will have been relieved to hear that HM Revenue & Customs (HMRC) has set up a Business Payment Support Service (BPSS) This is designed to help companies pay their income tax, corporation tax, National Insurance or VAT liabilities by allowing payment over a period that is 'as long as they need' Businesses have always been able to ask HMRC for more time to pay. but the BPSS promises to make this easier by speeding up the process. relaxing the conditions and allowing a longer payment period HMRC says it will discuss options tailored to the operation s needs and try to agree an "affordable payment timetable
What do you need to do'?
To apply, a business (or its appointed tax adviser) should check the guidance available on the HMRC website (www.hmrc.gov.uk/pbr2008/business-payment.htm) If this doesn't answer the questions. they can contact the BPSS helpline (before the date on which the tax becomes payable) on. 0845 302 1435. Monday to Friday from 8 00am to 8 00om; Saturday and Sunday from 8.00am to 4 00pm The HMRC adviser will only ask for the information they need to make a decision such as the businesss tax reference number. details of the tax liability, and basic information on the business's cash flow (i.e. income and outgoings) and a proposed payment plan Where possible, they will then arrange to collect these by direct debit payments Will the helpline be able to give me an immediate answer on all my tax debts?
HMRC says that in most cases it should be able to give a decision in about 10 minutes Larger or more complicated debts will need more detailed discussion This is because there will be instances, for example, where there are a number of different debts — when helpline staff will need to obtain information and advice from a different HMRC office In such cases, HMRC will aim to call the enquirer back within four working days
According to HMRC from 24 November to 10 December 2008. more than 14.000 calls were received, more than 5.800 time to pay arrangements agreed on the s totalling in excess of £103m, more than 2,400 cases referred for further consideration, totalling in excess of £153m, and more than 5.500 general enquiries.
What would HMRC not consider to be a reasonai time to pay? HMRCs approach is to consider all requests and in sl cases ask more questions to establish what is reason! in the circumstances. In some cases a request may n4 be reasonable if it does not start to address the size o debt and the debt is continuing to increase How much tax can be paid in instalments? Decisions will be made on a case-by-case basis and they will consider all requests regardless of the sum Obviously larger debts and those that are more complicated may require a more detailed discussion.
Will HMRC treat businesses with smaller debts a differently to those with larger debts?
They will treat all debts on their facts, but they expeci that they wilt be able to reach an agreement with minimal documentation for most smaller debts What the BPSS does not cover The BPSS is for new enquiries only. If an HMRC offic: has already contacted a business about an overdue payment the business should call that office to discus further payment options Similarly, if a business has a existing payment arrangement but is now concerned t it may not be able to meet the terms, it should discuss with the HMRC office that agreed the arrangement.
However if a business receives a warning letter a. court action and cannot get through to the office that sent it, it can call the BPSS to explain the situation Unfortunately HMRC will not repay amounts that already been paid and agree a new arrangement for these even if the business is experiencing difficulties after paying the tax What about interest and other charges? No additional charge will be made for agreeing an arrangement under the BPSS and no late payment surcharges will be made for amounts included in an arrangement Interest will continue to be charged in those cases where it applies However, the main rate interest for late income tax and corporation payment• was reduced from 6.5% to 5.5% on 6 December 200 and a further reduction may soon be made following recent cut in the base rate from 3% to 2%
What capacity does HMRC have to deliver this servi • The helpline alone will be able to handle up to 3,000 C. an hour. As you would expect, the busiest times are fr. 8.30am-10 30am and 12.30pm-14.00pm.
• Paula Tallon is a partner in BDO Stoy Hayward LLP, Chartered Accountants. Contact her at: paula.tallon@bdo.co.uk