Bentleys accountants are warning that there have been further reports that HM Revenue and Customs (HMRC) is taking a tougher line on companies that are asking for longer to pay their taxes under the government’s ‘Time to Pay’ scheme.
According to sources, HMRC rejected over 11 per cent of Time to Pay applications during the first quarter of 2010 – more than double the 5.3 per cent rejected in the same period last year.
As of 6 April, large companies have also had to shoulder the financial burden of the Independent Business Reviews themselves, in a bid to discourage applications from companies who do not have a genuine need to defer their tax payments.
John Shaw, partner at Bentleys said “HMRC has estimated that around 250 businesses a year would need a review under the new rules, following a recent increase in the number of large Time to Pay requests. It said the reviews would speed up the process of assessing a business’s long-term viability and ability to pay, to ensure support was not granted or withheld inappropriately, and that firms did not gain an advantage through using time to pay over firms which had sourced finance elsewhere”.
Businesses that fail to hand over pay-as-you-earn or National Insurance contributions on time may be asked to provide security against unpaid tax bills. Failure to meet this demand would be a criminal offence, bringing with it a fine of up to £5,000.