Changes in the way the tax man treats companies with money difficulties could lead businesses back into trouble just as they are recovering from the worst recession for many years.
Martin Williamson, a Stoke-on-Trent based Licensed Insolvency Practitioner, has warned that HM Revenue & Customs (HMRC) is putting business in jeopardy by tightening the Time To Pay (TTP) regulations which give leeway to companies struggling to pay their tax bills.
And the actions could backfire on the Government with billions of pounds being lost to the Treasury according to Mr Williamson of ipd.
Mr Williamson said: “While it is clear that TTP has been abused by some companies who could actually pay on time, it has also been useful in giving extra time to companies who just needed some leeway.
“TTP is available to companies until 2015 but analysts believe HMRC is set to formally reduce the time available to pay by a third to 12 months.
“In practice, 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.”
Mr Williamson, a Licensed Insolvency Practitioner, with 24 years experience, added: “With the strong possibility of a “double-dip” recession, most probably during the first six months of 2011, properly managed TTP schemes could mean the difference between survival or failure for many companies. HMRC needs to recognise this.
“In addition to the affect on companies, HMRC’s own recent annual report showed that TTP led to the recovery of £2 billion of tax that would have otherwise been lost to the Government in the last financial year.”
Insolvency Practitioners, including Mr Williamson, fear for the future of TTPs following a move by HMRC to withhold statistical information.
He explained: “This information is used by Insolvency Practitioners 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. HMRC’s stance effectively leaves me (and other advisors) with no benchmarks to work to.”
ENDS
For further information contact Martin Williamson on 01782 594344.
Notes to Editors:
In the UK, only a Licensed Insolvency Practitioner can be appointed in relation to formal insolvency procedures.
Martin Williamson set up Insolvency Practitioners Direct Limited, trading as “ipd”, in 2002 and has worked as a Licensed Insolvency Practitioner in North Staffordshire for 10 years having previously been with PricewaterhouseCoopers and Deloitte.