The Practical Guide to Limited Company Tax
If you have chosen to operate your business as a limited com...
By Jonathan London on 3rd August 2015
Freelancers and self-employed professionals need to make sure they are up to date with new changes to Time to Pay regulations that have been introduced by HM Revenue & Customs (HMRC) this week.
As of today (August 3rd 2015), all Time to Pay (TTP) arrangements – in which a business reaches a specific agreement with inspectors for late or staged payments of a tax liability- will now require the mandatory use of a direct debit.
Although this may not always be possible due to some banks not allowing direct debits to be set up in certain circumstances, HMRC will now be adopting the stance that such instances are to be considered exceptional, with no guarantee that alternative payment methods will be offered in these cases.
The department has also pledged to routinely revisit existing non-direct debit agreements, further underlining the government’s renewed commitment to strengthening HMRC’s debt collection powers and the need for business owners to take a proactive approach to paying back money they owe.
Designed to help HMRC collect tax in a cost-effective way, the TTP arrangements allow individuals who cannot pay on the due date to make payments over a period they can afford, with arrangements tailored to the ability of the customer.
Typically, they last for a few months, with TTPs lasting more than a year only agreed in exceptional cases. Most involve regular monthly payments being made, but can involve a short period of deferral in exceptional cases.
TTPs are usually used to assist businesses with short-term cash flow problems and can thus be a vital lifeline for smaller start-up companies that are struggling with financial issues. However, the change in legislation indicates that greater care will need to be taken in future to avoid falling foul of the regulations.
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