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"Time To Pay" Scheme Peaks As HMRC Increasingly Rejects Applicants

11/12/2009

By Lea Pachta

HMRC starts putting businesses into cold turkey.

Unincorporated businesses need to start preparing for funding of January 31 tax payment deadline.

The "time to pay" scheme has reached its peak as HMRC appears to be rejecting an increasingly large number of applications to take part in the initiative says Syscap, the UK's leading independent IT finance providers.

"Time to pay" allows businesses to defer tax payments during the recession.

Syscap says that, in the last few weeks, they have seen a notable increase in the number of businesses turning to them to secure loans to meet tax obligations either because HMRC has rejected their application to the scheme or because they have taken a business off the scheme.

Syscap explains: "HMRC's attitude to the "time to pay" scheme has radically changed over the last month. They have progressively raised the approval bar, started asking tougher questions, requested more details and are turning more applications down."

"Those that do manage to secure an agreement with HMRC are now faced with inflexible conditions and much tighter repayment schedules. HMRC is often asking for a big lump sum initial payment which is often several times that of the subsequent monthly instalments."

"They are definitely less willing to bespoke payments to fit the "seasonality" of a business or its cash flow cycles."

Syscap explains that the generous terms initially offered under the "time to pay" scheme were a response to the panic following the collapse of Lehman Brothers. Now that the economy seems to be stabilising, HMRC appears to be starting to wind down the scheme that has provided a vital lifeline to over 200,000 businesses.

Comments Mark Gidge: "Businesses can't take HMRC for granted. If a business can't fund a future tax or VAT payment out of their cash reserves then they need to look for commercial funding at... continued on page two >

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