Partner Article

Businesses urged to prepare for tax shake up

BUSINESSES across the North East should be preparing now for an end to tax regulations which have helped many of them make it through the recession, according to a regional insolvency expert.

Linda Farish, chairman of the north east arm of R3 and director of Recovery & Insolvency at Newcastle-based accountants RMT, was speaking as speculation continues to grow around the future of HM Revenue & Customs’ ‘Time To Pay’ scheme.

The Business Payment Support Service scheme, as it is officially known, was introduced in late 2008 to allow companies to agree a delayed payment schedule for their PAYE, National Insurance and VAT obligations, in order to improve their cashflow and help them stave off the full impact of the recession.

The scheme proved very popular with businesses battling the economic downturn, with more than £5bn of payments being delayed through around 300,000 Time To Pay agreements reached with HMRC.

But whilst Chancellor George Osborne extended the scheme in his recent Budget speech, informal feedback from across the insolvency industry suggests that more and more Time To Pay applications are now being resisted by HMRC.

Now, Linda Farish is warning firms not to allow themselves to be found to be illegally ‘trading whilst insolvent’ when the scheme is finally withdrawn. She said: “The Time To Pay scheme has been immensely valuable, and there is no doubt that many hundreds of firms that are still trading today would not have been able to come through the recession without it.

“However, Time To Pay was never meant to be a permanent arrangement, and whilst we know that it will continue in the short-term, with every aspect of public finance under intense pressure, we fully expect the scheme’s closure to be announced relatively soon.”

More than 6,000 North East firms had used the Time To Pay scheme to delay more than £100m of payments by September 2009, and it has remained a popular option in the region ever since.

This was posted in Bdaily's Members' News section by Ruth Mitchell .