In the world of small and medium sized businesses change is an
on-going feature of running a business. Some of the changes that
occur are beyond the control of business owners. Frequently these
changes emanate from statutory obligations to which the business
must comply. For example changes that are instigated by Companies
House or more commonly changes that come from Her Majesty’s Revenue
and Customs (HMRC).
Different schools of thought
Even though HMRC have not confirmed it officially there is reason to
believe that they are moving towards the closure of the Time to pay
taxation scheme. This is a scheme which allows small or medium sized
businesses to delay or stagger payment of their taxes as long as
they have prior agreement from HMRC.
Potentially, any such change may result in financial hardship for
small businesses. Staggering or delaying payment can have a positive
effect of improving cash flow. As such the business is able to
benefit from the delay in paying taxes. Satisfying taxation bills
can mean that a considerable sum of money has to be paid out in one
go. Inevitably this has the knock on effect of reducing any monies
available to spend on a daily basis and may mean financial hardship.
The ability to stagger the bill inevitably gives the business more
options and an increased ability to manage their cash flow thereby
improving the chances of survival.
Recent data
When compared to historical data dating back to 2009 figures show
that HMRC has steadfastly declined repeat applications. As such one
third fewer applications have been granted. The reduction in the
number of businesses being able to delay payment coupled with the
recent uncertainty in the current economic climate brings with it
increased concerns for business owners. Statistics show that 9.3% of
businesses who applied for time to pay in the first quarter of 2011
were refused permission to do so. This is compared to 6% in 2010 and
2.9% in 2009.
Allowing businesses to delay payment is a bonus during normal
economic conditions; it can be a god send during difficult or
turbulent times. Once again HMRC has not confirmed that the time to
pay scheme will be scrapped but the writing is on the wall. Never
the less HMRC still continues to offer a listening ear to businesses
that find themselves in difficulty. Their Business Support Service
can discuss options for payment and ways forward for the business.
It is important that any options discussed be shared with your
accountant as they will be able to add increase understanding to the
situation.