HM Revenue and Customs have provided a Time To Pay scheme ("TTP") to businesses who have struggled to pay their tax on time since December 2008. A TTP scheme (once approved) allows a business to defer payment of its outstanding tax by paying it over a period of time. That period can vary from a few months to 12 months or even possibly more.
However, statistics published in October 2010 (see here) show a dramatic reduction in the number of TTP schemes being approved. In the 12 months of 2009, 256,500 schemes worth £4.5bn of unpaid tax were approved. However, in the 9 months to September 2010, only 114,600 were approved, worth £1.9bn of unpaid tax. Scaling this up to a potential 12 months for 2010, this is a reduction of 40.5% on the number of schemes and 44.5% in value compared to 2009.
Essentially therefore, the number of businessess taking advantage of a TTP scheme has almost halved in less than 12 months.
It is difficult to draw any conclusions from this set of statistics in isolation. The decline in approved TTP schemes could be down to businessess improving in their financial health to the extent that they feel they don't need a TTP to survive. However, it could be that those businessess just haven't applied for a TTP because they feel they simply won't get one due to an acknowledged "tougher" stance by HMRC. Once the third quarter (to the end of September 2010) insolvency statistics are released (in November 2010) a comparison can be made to see if there has been a corresponding increase in business failures.
My own experience as an Insolvency Practitioner over the last 12 months or so is that businesses that probably (on 2009's perceived acceptance criteria) should have had a TTP approved, had it rejected in 2010. This would fit in with the rate of refusals which were 2.6% in 2009 and are currently 5.2% so far in 2010. This indicates to me that even though less businessess are applying for a TTP, more are being rejected. The Coalition Government has indicated that TTP will remain an option open to all businessess for the forseeable future. However, in my humble opinion, how long TTP will actually be available will depend on your interpretation of "forseeable" - this may be shorter than you think!!
