Over the course of the last few weeks, HURST Accountants have been working closely with a number of businesses to understand their cash flow requirements in light of the disruption that the COVID-19 pandemic has caused. A recurring message is, unsurprisingly, that regular tax payments such as VAT, Corporation Tax, and PAYE are a significant cash burden. As a result, a number of businesses are investigating HMRC’s Time-To-Pay Arrangements (“TTPA”).
TTPAs have been around for many years. Ordinarily they work by allowing businesses to convert current tax liabilities into an instalment payment plan, typically over a period of 3-12 months.
My experience of HMRC’s approach to such arrangements, both in practice and in industry, is that HMRC try to be as flexible and transparent as possible when negotiating TTPAs, and expect the same from taxpayers.
Given the current climate, HMRC have invested significant additional resource into dealing with the growth in demand for TTPAs. Our advice is that taxpayers who are facing uncertainty about being able to pay any taxes should contact the Covid-19 dedicated helpline:
0800 024 1222
Anecdotally, we are hearing that it is sometimes taking HMRC operatives a considerable period to answer enquiries, so our advice is to act in plenty of time, in particular if your cash flow models anticipate the need to defer tax payments in the future.
As a word of warning, please remember that TTPAs are presently intended to defer current tax liabilities, not pending or future ones, although it remains to be seen if this condition will be relaxed in the exceptional circumstances presented by COVID-19.
How We Can Support You
If you would like to investigate TTPAs in more detail, please speak to us for advice. We have experience of negotiating TTPAs with HMRC, and we also can suggest workarounds where contact with HMRC proves difficult.
It is likely that HMRC will require some form of evidence to demonstrate cashflow concerns, and we can also work with you to help establish an appropriate and documented fact pattern. The information required might include:
- reasoning behind the deferral proposal
- steps already taken to secure cash flows (e.g. other sources of financing)
- proposed deferral period
- liabilities to tax
- cash flow projections
And remember - if you are anticipating significant cash flow shortfalls, you can combine a TTPA application with an application for additional funding under the Coronavirus Business Interruption Loan Scheme (“CBILS”). If you would like more information on CBILS, please click here to contact a member of our Corporate Finance team.
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