In 2009, HM Revenue & Customs (HMRC) introduced the 'time to pay' (TTP) initiative scheme for businesses struggling to survive the recession. It was recently reported that this has now topped £4.3bn in deferred payments. Continuation of and commitment to the scheme was announced in the December Pre-Budget Report, notwithstanding that we know HMRC is now coming down much harder on first-time applications and certainly repeat deferral applications. HMRC suggests that for deferral requests in excess of £1m it will require some form of third party comfort.

HMRC is clearly contributing to business survival – which is good news – but there will come a time when enough is enough. Businesses need to manage their tax cash flows and this is an ideal time for identifying opportunities for tax refunds and minimising tax obligations. It may also mean using the TTP arrangements for VAT, PAYE/NIC and corporation tax, and possibly even renegotiating repeat deferrals with HMRC where perhaps over-optimistic projections have not materialised and businesses struggle to meet agreed payment plans.

Businesses need a holistic approach to getting their proposals to HMRC right at the first, and certainly no later than the second attempt. This means understanding the timing of all tax cash flows. We've outlined three key steps to help you fulfill your requirements.

  1. Communicate with HMRC at the right time, to alert it to the need for payment assistance, or extension/amendment to the existing TTP arrangement. The business must be able to demonstrate a genuine need for business support, the steps taken to address the issues, and its commitment to meeting obligations.
  2. Articulate the business case for deferral, while anticipating HMRC's likely responses and concerns regarding current circumstances.
  3. Ensure sensible but achievable cashflow projections and payment plans that meet the needs of the business within HMRC's constraints.

Most of HMRC cases can be expected to be dealt with through the helpline channel as routine. However, the more complex cases with significant amounts and special features, and/or repeat deferrals, are escalated. This is typically where businesses need specialist help. Bear in mind that HMRC intuitively does not regard itself as the nation's banker, and expects all other sources of finance to have been explored.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.