Business Payment Support Scheme: what every business owner needs to know

Britain’s businesses will face enough challenges over the coming months without having to worry unduly about their responsibilities to the Treasury. So the government have launched a brand new Business Payment Support Scheme to give worried entrepreneurs some breathing space. It’s called Time to Pay.

There has always been an opportunity of sorts for troubled taxpayers to schedule their repayments to the Revenue. Going to court is an expensive process, even for HMRC, who would rather come to an arrangement out of court if possible. But thanks to the credit crunch, this new scheme means HMRC's terms have become even more business-favourable. Now entrepreneurs have the chance to agree a timetable of payments for all centrally collected taxes: PAYE, VAT and National Insurance contributions, as well as corporation and income tax. What’s more, if the application is successful, the taxman will waive all surcharges and penalty payments. You'll just have to pay interest on what you owe.

The new Business Payment Support Scheme is designed primarily for businesses which are not already being pursued by HMRC for outstanding debt, so it’s important to make an application sooner rather than later. The department has a mandate to promote the scheme and ensure it is widely used, but if you are already caught up in the debt collection process you may be turned down automatically (and if you’re in this situation, you need to talk to us right away).

The benefits
The interest rates payable on delayed tax payments are better than those available from commercial lenders (assuming you were able to secure credit), so if you’re running in the red, as many businesses are, a successful application to schedule your tax repayments will save you money.

Interest rates
The current interest rate for deferred tax under the Time to Pay Scheme is a competitive 4.5 per cent. For larger companies, which have underpaid corporation tax installments, it’s only 3 per cent, with a further reduction predicted soon. For VAT, as long as you file your returns on time, there may not be any interest payable at all.

If you like, you can apply direct. There’s a new HMRC phoneline dedicated to the matter (the number is 0845 302 1435) and callers are promised a swift decision on their application. However, you’ll need to present your case, and the more complex your application, the longer the process.

We can help you come up with a schedule for all your tax repayments, as well as help you to show the taxman that your business is in genuine difficulty, and that while it can’t pay its tax debts right now, it will be able to in the future.

If you don’t meet those criteria, HMRC have told us your application will fail. Our experience also means we have a good idea about what is appropriate when it comes to repayment timescales. It’s important to get it right when you apply, because if you default on your agreed schedule you will become liable for penalties again.

Don’t pay tax sooner than you have to. Ask us about the new Time to Pay arrangements.