HM Revenue & Customs “Time To Pay”

The growing scale of economic disruption amid volatility in financial markets as a result of the COVID-19 means urgent steps are required in order to restore business confidence....

Subsequently, businesses should welcome the fact that the government has taken steps to expand support offered through Time To Pay (TTP) arrangements in the latest Budget and 20th March announcement. This is according to Duff & Phelps, the global advisor that protects, restores and maximises value for clients. 

Giving firms more time to pay VAT, payroll taxes and Corporate Tax—in effect expanding HM Revenue & Customs (HMRC) TTP scheme offering support through extended payment terms—has sent a strong signal that the government is listening to the concerns of business leaders who are worried about the impact of COVID-19 on cash flow. 

The announcements made on 20th March also included a new Coronavirus Job Retention Scheme as well as deferred payments on the next quarter VAT payments until the end of June 2020. Businesses then have until the end of the 2020/21 tax year to settle any outstanding liabilities. 

Where cash is a commodity and when facing financial pressures, a TTP arrangement with HMRC can be a key component of a successful turnaround plan that preserves an enterprise and safeguards jobs. Given the current economic turmoil, it may well be a critical tool in the economic armoury, preserving the integrity of British businesses. 

David Fleming, Managing Director, Restructuring Advisory, Duff & Phelps, stated: “A TTP arrangement with HMRC is a structured repayment plan for any outstanding tax obligations. Companies that have defaulted on their payments in relation to Corporation Tax, VAT and/or PAYE can ask HMRC for additional time to pay. They assess the business case and can provide repayment plans that typically extend to 6-12 months.”  

As part of a package of measures, the government has launched a Coronavirus Business Payments Support Service specifically to help businesses in arrears with existing tax liabilities up to circa £100,000. Larger liabilities are expected to be dealt with on a case-by-case basis. Furthermore, the government launched a new helpline to support businesses and self-employed people who are concerned about not being able to pay their tax due to the financial impacts of COVID-19. 

In addition, the Chancellor announced a refund on all Statutory Sick Pay up to two weeks for all businesses under 250 employees. Business Rates Relief was also dramatically expanded for those businesses in retail, hospitality and leisure. 

Fleming added: “HMRC is committed to supporting businesses via TTP arrangements that can demonstrate viability and present a strong case for support. Given the impact coronavirus is having on a broad range of industries, we would argue that TTP expansion will not only consider those businesses that have already defaulted, but also those that are trying to find solutions with an immediate need for cash.” 

Additionally, the government has launched the Coronavirus Business Interruption Loan Scheme (CBILS) to support long-term viable businesses who need additional finance for cash flow issues. 

Fleming added: “This scheme will be delivered by the British Business Bank (“BBB”) and will launch in “a matter of weeks.” Whilst BBB will provide a guarantee of 80% of the loan, the loans are expected to be approved and made by the clearing banks and other authorised lenders. There will be per lender caps and the scheme will support loans of up to £5m.” 

Fleming continued: “The decision to expand TTP and even provide a holiday in relation to interest and penalties resides with the government. Through BBB and TTP it is our belief that the way HMRC operates will have a major, sustained and positive impact for businesses throughout the UK. But this is a changing situation and more action may yet be announced by the Chancellor.” 


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