HMRC Time to Pay
Recent figures have seemed to confirm this. In the year ended 31 March 2012 HMRC issued 5,302 winding up petitions as opposed to 3,367 in the year ended 31 March 2011. This represents an increase of 57%.
Bankruptcy petitions rose by 45% from 3,199 in 2011 to 4,618 in 2012
In the wake of the economic crash of 2008 HMRC was encouraged by government to take a sympathetic approach to struggling businesses. The “Time to Pay” scheme was implemented in order to provide assistance to struggling businesses. HMRC stopped publishing time to pay statistics after July 2011.
Bretts submitted a ‘Freedom of Information Request’ to HMRC requesting the following information for 2011 and 2012:
- The number of time to pay arrangements entered into
- The number of time to pay arrangements renegotiated
- The number of time to pay arrangements that have failed
- The number of applications for time to pay arrangements that were rejected.
HMRC were very quick to respond. They were unable to answer questions 2, 3, and 4 on the grounds that it would cost more than £600 to comply with our request. However they did advise that the number of time to pay arrangements in place as at 31 March 2012 was 600,000 as opposed to 428,000 as at 31 March 2011.
These figures suggest that HMRC is continuing to support struggling businesses as the number of bankruptcy and winding up petitions issued, despite showing significant increases, represent only a very tiny percentage of the Time to Pay agreements in place in the same period (1.6%).
We would be very interested to learn of your experiences of submitting applications for Time to Pay agreements.
The message seems to be that HMRC will support viable struggling businesses but they will not offer second chances to those businesses that default on their time to pay arrangements. They will take the appropriate action whether that be distraining over assets or issuing bankruptcy or winding up petitions.