FREE UP CASH - HMRC HELP



If you have any questions, please get in touch with our COVID-19 Task Force here


RELEVANT AS OF 1:00 PM ON 31ST MARCH

Right now, cash is king. How you manage your revenue, costs and tax position will help to improve cash flow and can also bring new cash into the business. A few straightforward tweaks to revenue and costs may help in the immediate term. For example, you can bill earlier, speed up payments through deposits or prompt payment discounts, and agree to pay suppliers later.

Tax can play a significant part in generating cash.  Here we look at:

  • HMRC’s time to pay arrangements – agree up front to defer the tax you owe to HMRC.

  • Generating cash by accessing some very generous tax reliefs in the form of research and Development Tax Credits and Capital Allowances.

Time to Pay arrangements

If your payment obligations in respect of tax are leaving the business in distress and you require support, HMRC will offer ‘Time to Pay’ arrangements on a case by case basis– but what exactly is on offer?

Here’s what we know so far:

  • 2,000 experienced call handlers are available on 0800 0159 559 to talk to businesses and self-employed people who are concerned about struggling to paying their tax due to coronavirus;

  • The time to pay provisions can apply to any tax (PAYE, VAT, Corporation Tax etc) which a business owes HMRC. The VAT deferral period is currently ongoing, if you need more information then it is here.

  • The handlers will discuss paying your tax by instalments, suspending debt collection proceedings, and cancelling penalties or interest where these have arisen due to administrative difficulties with contacting or paying HMRC;

  • HMRC asked those who have already missed/will miss their next payment to call the helpline, but asked those worried about a future payment to call nearer the time.

‘Time to Pay’ is not a new concept and we hope HMRC will be more lenient in their approach given the circumstances. Right now, HMRC are saying requests will be reviewed on a case-by-case basis, so it’s hard to be specific. Early indications are that requests are being dealt with sympathetically although it is taking some time to get through.

From past experiences, you can expect a time to pay negotiation to cover:

  • The amount of tax you need more time to pay and the reasons why;

  • What you’ve done to try and pay the tax so far;

  • Details about your income and expenditure, including projections and forecasts;

  • Whether you’ve approached your debtors to try and get more cash in;

  • Whether you have sought wider funding and sufficiently negotiated payment terms with wider suppliers;

  • How much you can pay right now and how long you want to pay the rest over; and

  • Evidence that you will continue as a going concern once the time to pay arrangement has been settled.

If you’d like any assistance to help prepare for your conversation with talking to HMRC regarding ‘Time to Pay’ arrangements please get in touch with Mark Baxter.

It is worth thinking about what opportunities are available to optimise your VAT cashflow beyond the current VAT deferral period. Get some insight here from our VAT partner Damian Shirley.

Generating cash by accessing tax reliefs  

We see two key opportunities to generate tax cash repayments:

  • Research and Development Tax Credits;

  • Capital Allowances; and

R&D tax credits can generate cash repayments for any business that spends money on qualifying R&D.  Qualifying R&D is wider than you may originally think it is. A lot of businesses are reliant on R&D tax credits being refunded from HMRC so making sure you know where you are with your claims and claiming the full amount you are entitled to is important to your cash. To date there have not been any announcements made on speeding up R&D refunds in the current climate but we are lobbying hard for some help, and hope to hear more from HMRC in due course. Click here to hear the latest from our R&D partner Chris Knott.

Capital allowances are a form of tax relief for capital expenditure incurred on property, plant and equipment.  When it comes to commercial property we can help to make sure you’ve claimed all the relief you are entitled to on current and historic projects   Whether the projects are a purchase, a new build, refurbishment or fit out, there is often no time limit to making historic claims.  On recent projects we’ve secured repayments of corporation tax for many businesses that have underclaimed capital allowances.

Get in touch with our capital allowances expert Jeremy Chapman and hear his further thoughts here.

 If you have any questions, please get in touch with our COVID-19 Task Force here