Possible tax lifeline for bosses as deadline nears

Proprietors are reminded that as another tax deadline approaches on July 31, there is a potential lifeline available should your business need it.
 
The Business Payment Support Service (BPSS) was introduced by HMRC last October and continued by this year’s Budget.

With the second payments on account for 2008/09 due at the end of the month, now is the time for businesses to consider whether they can and should take advantage of a ‘time to pay’ arrangement.

BPSS is not only available as a last resort but can be used if paying tax in one instalment would cause difficulties. According to tax specialists Baker Tilly, these difficulties might include onerous borrowing terms or the risk of hitting, or exceeding, the borrowing limits set by the business’ bankers.

BPSS is not confined to the income tax and National Insurance contribution payments on account: it is also available to companies with corporation tax payments looming. For most companies, whose accounts were made up to December 31, 2008, this includes the payment that is due no later than September 30, less than two months away.

Take advice now, if you think you might need to use BPSS.

Another significant payment coming soon relates to PAYE settlement agreements for employee benefits. The deadline for applying for a PAYE settlement agreement is today, July 6, and payment of the tax and NIC is due by 19 October.

Applying to HMRC for additional time to pay may ease the pressure but businesses also need to make sure that their banks don’t negate the advantage by revising their lending terms. Businesses also need to ensure that the payment that will eventually be due to the taxman, with interest, is factored into their cashflow plans.