A few months ago I blogged on HMRC’s Business Payments Scheme, giving some guidance on what directors of struggling businesses should think about to give themselves the best chance of putting in place a time to pay arrangement, but forewarning that the Revenue could be expected to take a more robust stance some time down the line.
My experience since then is that both HMRC and most companies in time to pay arrangements have merely been treading water – there has been no real improvement, nor for that matter any major deterioration, in the companies’ financial position and HMRC have not yet moved the goalposts.
Many commentators, particularly those involved in the insolvency profession, are of the view that it remains to be seen whether time to pay arrangements will ultimately turn out to be a good, or bad, thing for the economy overall – a good proportion of Midlands based companies in time to pay arrangements will eventually go into liquidation – for them all that entering into the ttp arrangement will have done is defer the inevitable, often increasing the government’s write off – how does that increased write off compare with the costs associated with losing that business now? In reality, we will never know the answer, but what is clear is that the government should be applauded for trying to support the Midlands economy in a practical way rather than merely putting the boot in and forcing companies into liquidation as was the case in previous recessions.
The main question directors of businesses that are already in such an arrangement are asking themselves is just how are they going to get out of it? Given the vagaries of the economy, they are relying on a combination of ongoing HMRC indulgence and a measure of good luck. As good luck tends to only happens singularly, while bad luck happens in spades, some guidance from HMRC as to their likely approach going forward would be helpful, if only to help directors understand the full extent of their difficulties and plan accordingly. It is for this reason that the Michael Izza, the head of my governing body, the Institute of Chartered Accountants in England & Wales, is asking the Treasury to clarify HMRC’s approach to collecting in the arrears. When someone like Mr Izza write to the Treasury, you know there is an issue, and while Mr Izza has finally decided to address something us IPs have been talking about for the last 12 months or so, his concern is better late than never. If I hear the Treasury’s response, I shall summarise here in my blog.