Time-to-pay on larger tax bills: business review required
From 1 April 2010, businesses seeking extra time to pay a tax debt of over £1million will, in most cases, need to get an independent review in support of their request. The review must be carried out by an independent third party, so the tax authorities are unlikely to accept reviews from a firm’s existing advisers.
This new ruling will affect many organisations struggling to meet their tax bills given that, as at February 2010, HM Revenue & Customs had granted £5billion worth of time to pay arrangements for tax bills.
“The tax authorities will expect a report which essentially considers the economic viability of the time to pay proposal. The report is likely to cover cashflow, annual and management accounts, business projections, valuations of fixed assets, debtor lists and bad debt provision as well as future trading plans and provide some detail on suppliers. It should also note any restructuring plans which are in place,” explained Richard Mannion, national tax director at Smith & Williamson.
Time to pay tax agreements are arranged with the Business Payment Support Service (BPSS), which is part of HM Revenue & Customs. The BPSS was set up in 2008 in response to the worsening economic position in the UK and recognised the impact of the recession on business profitability and, more seriously, the problems faced by many businesses regarding cash flow.
“In short, the point of the independent business review is to enable the taxman to make an informed decision on the viability of the proposal. Whoever carries out such a review must be approved by the tax authorities,” added Mr Mannion.
The BPSS is widely regarded as having been very successful in helping cash-strapped businesses get through the recession. While an independent business review will be required by the taxman for larger and more complex cases, the majority of straightforward applications for time to pay on tax agreements can be dealt with in a matter of minutes over the telephone.
For further information:
Richard Mannion, 020 7131 4252 or 07799 761 326
Email Richard Mannion
Press queries:
Kate Harrison 020 7131 4228
Email Kate Harrison
Disclaimer
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
Note to editors
Smith & Williamson is an independent professional and financial services group employing around 1,500 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-to-large corporates. The group operates from offices in London, Belfast, Birmingham, Bristol, Dublin, Glasgow, Guildford, Salisbury, Southampton, and Worcester.
Smith & Williamson Limited
Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International
