681,000 UK taxpayers forced to reschedule payments with HMRC

Some 681,000 UK individuals and businesses are so far behind with their tax bills that they have been forced to reschedule their payments with HMRC, according to research by UHY Hacker Young.

Taxpayers are able to reschedule their tax payments with HMRC by agreeing ‘Time to Pay’ arrangements. These allow taxpayers to pay their taxes over a longer period of time, but can be extremely difficult to negotiate.

The research shows that the Brexit-related and broader slowdown of the economy has put the finances of small businesses and individuals in a squeeze, making it harder for them to pay their tax bills. For example, the number of individuals entering insolvency has risen by 14% to 121,700 in the last year alone.

HMRC’s controversial ‘Loan Charge’ is also likely to have caused a surge in the number of taxpayers forced to ask negotiate ‘Time to Pay’ arrangements with HMRC. The Loan Charge was introduced by HMRC earlier this year to effectively claw back up to 20 years’ worth of tax it believes it is owed by individuals who used disguised remuneration schemes.

The Loan Charge, which is now under review by the Government, forces those with outstanding debts to pay all the outstanding tax in one lump sum. That tax bill will be unaffordable to many of those taxpayers.

Clive Gawthorpe, a tax partner at the firm’s Manchester office, said: “With the economy putting both small businesses and personal taxpayers under so much pressure it’s no surprise that people are struggling with their tax bills. What is surprising is it that it is now affecting more than half a million taxpayers.

“However, Time to Pay arrangements remain notoriously difficult to agree with HMRC. Even when HMRC does agree them, they usually only last for one year. Many people need more time than that.”

He added that HMRC “should be applauded” for being more reasonable with some taxpayers affected by the Loan Charge; HMRC agreed to payment plans of up to three years for individuals in some cases.

Gawthorpe said: “There are some areas where HMRC is being more accommodating, but that does not mean an agreement is guaranteed in any circumstance. People must be aware that these arrangements can take time to negotiate, so approaching the Revenue sooner rather than later is likely to be the best tactic.”


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