Premier League Footy uses TTP!

Having just blogged (here) about how HMRC is making it more difficult for me to assess if a Time To Pay ("TTP") proposal could be accepted by HMRC, we now find that Premier League and Championship clubs have already deferred over £6m in tax since 6 April 2010 (about 5 months!). The full article in Accountancy Age is here.

No wonder HMRC is getting continuing to get tough on football clubs, although I happen to agree that they should! It would be useful if HMRC would provide some better guidelines on what a basic TTP scheme should cover, but the usual answer is always "..each case on its merits..." Doesn't help though!

HMRC holds back on Time to Pay information

In an article in Accountancy Age on 19 Aug 2010, it was revealed that HM Revenue & Customs are witholding statistical information on the Time To Pay ("TTP") scheme utilised by struggling taxpayers in recent years. The article can be found here.

The information is used by insolvency practitioners (such as me!) to determine if a business is likely to be successful in achieving a TTP, or whether time and effort could be better utilised pursuing another strategy to protect the business. This effectively leaves me (and other advisors) with no benchmarks to work to.

It is clear in the past that in some cases, the TTP scheme has obviously been abused either by companies that could actually pay thier tax on time, but chose to defer it using the scheme, or by those companies who would never have been able to pay, even under TTP, and used it as a mechanism to delay the inevitable closure of their business.

In HMRC’s latest annual report, released in March 2010, TTP agreements were estimated to be more than £5bn which had led to recoveries of at least £2bn that would not have otherwise been achieved. However, the recent lack of information could be a sign that HMRC is tightening up on its previously relaxed admittance policy to TTP schemes.

Although TTP will be available to companies until 2015, HMRC may also be reducing the length of time TTPs run. It could bring many schemes down to 12 months from the previously set standard of 18 months. I believe this is already happening anyway as the majority of TTP schemes I have come across, or negotiated on behalf of clients, during 2010 have been limited to 12 months anyway.

In my view, by failing to reveal the data, HMRCis definately making it harder for companies to manage their tax debt properly. A HMRC spokesman said: "Publication of the statistics has no direct bearing on the level of service (hmmm...) that HMRC provides for the Business Payment Support Service...there has been no change in HMRC's policy or criteria for TTP, which has long been a feature of HMRC's approach to tax debt collection. Each case is considered entirely on its own merits." Draw your own conclusions from this...!

With the strong possibility of a "double-dip" recession, most probably during the first 6 months of 2011, properly managed TTP schemes could mean the difference between survival or failure for many companies. HMRC needs to recognise this and keep providing the statistics.

HMRC's defence needs a new back four

I'm pleased that HMRC have failed to overturn the Portsmouth CVA as I feel the grounds for objecting to it were wrong, given the effect of the Football Creditors Rule. HMRC should (and indeed is) challenging the FCR separately.

However, the failure to defeat the CVA has cost HMRC (and indirectly us, as taxpayers) £200,000. See the article in Accountancy Age here. Methinks HMRC's defence needs bolstering for the next round!

Portsmouth FC survives...just

Portsmouth FC have managed to hang on to their CVA, by the skin of their teeth. Well done Portsmouth!! See the article in Accountancy Age here.

It still doesn't sort out the unfair Football Creditors Rule, but at least sense has prevailed! CVA's can work in the right circumstances. It's now down to Portmouth to ensure that the terms of the CVA are met. We shall see if their performance will bring them back to the Premiership next year!