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‘Time to pay’ scheme might become more demanding

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Firms that want to agree an extended timetable for paying their tax bills under the Business Payment Support Service might be faced with more stringent questioning from HM Revenue and Customs.

In the pre-Budget Report, the Chancellor said the scheme, which enables firms that are facing temporary financial difficulties to arrange with HMRC for more time to settle their PAYE, corporation or VAT tax charges, will continue indefinitely.

However, some experts have warned that the scheme’s generosity – often vetting involves not much more than confirming that the business concerned is free of outstanding tax debts – allows businesses that are essentially no longer viable to continue even as they accumulate un-repayable debts.

The Treasury might be planning to take such concerns on board. The pre-Budget Report indicated that HMRC officials will start requesting an independent assessment of firms that ask for a delay of tax debts amounting to more than £1 million.

So far over 240,000 ‘time to pay’ agreements have been reached, amounting to £4.2 billion in late paid tax. Six out of ten of the agreements have been for three months or less.

As of the first week in December, £3.3 billion has been forthcoming from struggling firms, with a further £1 billion yet to be settled.

About 8,000 applications to the scheme have been refused, and HMRC has suggested that more exacting questions have been asked of firms that wish to extend debt repayment periods.