Companies shun tax deferral package

Manufacturers and engineering companies have turned shunned a £5.2bn business tax support scheme after the Government’s decision to make it harder to access.
Since December, companies looking to defer over £1m of VAT, PAYE or corporation tax under the two-year-old “Time to Pay” scheme have faced tough questioning from HM Revenue & Customs. They also have to pay for an independent review of their needs, at around £30,000.
These moves have led accountants on the panel appointed by HMRC to conduct the reviews to say that only a handful have been carried out since the start of the year.
This and the improvement in the economy has led to a dramatic decline in the total amount of tax being sought and approved for deferral.
The total of new tax deferral approvals fell by 58pc from £1.84bn to £770m this year. Manufacturers saw the largest fall, from £73m of tax approved for deferral in the first quarter of 2009 falling to £20m in the same period this year.
Philip White, chief executive of finance firm Syscap, which obtained the figures from HMRC, said: “Many will be particularly concerned to see the manufacturing sector witnessing the biggest fall in ‘Time to Pay’ arrangements, because it was expected that the Government would give more financial support to the sector to help rebalance the economy away from a concentration on financial services.”
HMRC has not published details on the scheme’s use since mid-March. Then, more than 200,000 businesses had used the two-year-old scheme to defer around £5.2bn of tax.
An HMRC spokesman said: “HMRC remains absolutely committed to demonstrating a sympathetic approach to businesses that have genuine short-term difficulties in paying the tax they owe.