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HMRC Time to Pay Deals

31 January 2018

An amazing 180,000 companies are now using the HMRC time to pay programme according to HMRC and the Sunday Times. Some £3.2billion is now being paid over periods of 6-24 months.

Since February 2009 some 120,000 companies or 24,000 a month have joined the scheme. Some 1,100 deals are being handed out every business day!

This staggering number of insolvent companies (not being able to pay PAYE and or VAT on time is a test for insolvency) not paying their taxes on time is a huge shield for those SME's but is also a false sense of security about the state of business in the recession. Had half of these entered some of form of insolvency or closed for business the outcry would have been huge. Of course, this is the main aim of the scheme, keep the bad business news and lost jobs out of the headlines, there's an election coming!

In normal times the tax collectors would be pursuing these companies with vigour and using County Court Judgments, winding up petitions and bailiff action. Now, the government is positively championing this time to pay programme as a positive thing! How times change.

I also note the articles in the Sunday Times, on 2nd August, stated that thousands of companies owing £320m (or 10% of the total) are now on second or subsequent time to pay deals. In other words, they are insolvent, they then failed to pay the first deal and have been given a second or further chance. How far to take this? Three or four deals? More? When does HMRC start taking legal action against defaulters?

Aside from the politics of avoiding lots of insolvencies, is this de facto bank lending? Given that the Lloyds TSB/ HBOS/RBS nationalised banks are struggling to lend is the bank of HMRC taking up the slack? Slightly cynical perhaps, but I meet many people who are amazed and annoyed that 180,000 companies are getting a government-sponsored loan that, in effect, gives them an advantage over their competitors who are paying their taxes on time.

What other solutions are there?


If companies are failing to meet these time to pay deals they should consider using a more radical restructuring tool like company voluntary arrangement. It leaves the directors in control of the business, avoids voluntary liquidation and administration and gives the ability to pay %age of the company's overall unsecured debts over up to 5 years.

If the company is not viable, then creditors voluntary liquidation or administration should be considered. Finally, when the HMRC programme comes to an end and normal rules apply, expect a lot of compulsory liquidations.

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