Tax & Accounting News

Business Payment Support Service

15/01/2009

Harris Lipman is highlighting the potential benefits for businesses suffering in the current economic climate of deferring tax payments through HM Revenue & Customs’ new Business Payment Support Service (BPSS).

BPSS was launched following Chancellor of the Exchequer Alistair Darling’s Pre-Budget Report on 24 November, to offer businesses in temporary financial difficulty the opportunity to pay corporation tax, income tax, national insurance contributions, PAYE, VAT and other taxes owed to HM Revenue & Customs (HMRC) to a timetable they can afford and without surcharges on payments involved.

The service is already proving popular, with the BPSS helpline receiving almost 29,000 calls from struggling businesses since its launch. The helpline is normally able to provide an immediate decision on debts under £10,000.

According to an Accountancy Age report, the BPSS helpline granted 14,200 extensions to tax bill deadlines between 24 November and 4 January, to a total value of £223.9m. A further 4,700 cases, worth £325.8m, have been referred for further consultation.

It is understood that HMRC is applying the following criteria:

• Debts under £10,000: normally an immediate decision is available (a helpline set up after the Pre-Budget Report can do this)
• Debts between £10,000 and £100,000: a similar process applies but applications will be looked at in more detail
• Debts over £100,000: will be referred to the local HMRC office. HMRC has indicated that it is likely to view time to pay proposals of three months or less sympathetically, provided the business provides evidence of financial difficulties.
• Debts over £100,000 and over three months to pay: cases will be judged individually, using evidence including cash flow and management accounts. The case may also be referred to HMRC’s advisory accountant.
• Debts above £500,000: these will be dealt with by specialist offices, typically the Enforcement Office for direct tax and the National Debt Unit for indirect tax.

Harris Lipman’s head of tax Martina Fitzgerald said: “The payment deferrals available through BPSS are certainly worth exploring as they offer businesses a useful opportunity to improve cash flow.

“We are happy to advise clients seeking payment deferral or with other opportunities to improve their cash flow by making arrangements with HMRC, such as making use of losses before statutory accounts are finalised, so that losses can be carried back to set against profits from an earlier period.

“Other potential options include obtaining tax repayments that had been withheld due to ongoing tax enquiries or agreeing time to pay when conceding tax planning issues.”

More information on the BPSS is available at www.hmrc.gov.uk/pbr2008/business-payment.htm and the helpline can be contacted on 0845 302 1435.

For further information or advice, please contact us.

 

Print page