Member Article

Talking tax: Out of the ashes

AT THE end of last month, HMRC responded to the difficulties businesses may have encountered as a consequence of the recent disruption to air travel resulting from the volcanic ash cloud.

HMRC have advised businesses who are worried about being able to meet tax, National Insurance, VAT or other payments owed to HM Revenue & Customs (HMRC), or who anticipate being unable to afford to make payments becoming due, as a result of the disruption caused by the volcanic ash cloud, to contact Business Payment Support Service (BPSS). The BPSS was launched in November 2008, as part of the Chancellors Pre-Budget Statement, in response to the impact on businesses of the current economic conditions.

The BPSS is a service through which businesses can make arrangements with HMRC to pay tax, National insurance, VAT or other payments owed to HMRC over a longer period of time, without incurring the usual late payment surcharges.

Interest is still be payable on late payments, however, rates are not excessive. The current rate for corporation tax, income tax, national insurance and capital gains tax is 3%.

The BPSS was further extended by Budget 2009 to allow businesses to have current period losses taken into account in calculating how much they have to pay.

This effectively enables tax relief for losses to be obtained as the losses arise, rather than relief being obtained upon a claim being made through the self assessment tax return process, which could be up to 9 months after the end of the accounting period for companies or up to 21 months after the end of the accounting period for unincorporated businesses. The majority of decisions are given within 10 minutes of contacting the BPSS by telephone and the service is also flexible to accommodate changing circumstances.

Where a payment timetable is agreed but business circumstances change so that the business is unable to keep to the payment arrangement, HMRC will consider amending and extending the agreement. Many regional businesses are already taking advantage of the BPSS facility and HMRC indications are that the majority of businesses using the service have agreed repayment timetables spread across 3 to 6 months. Where taxpayers have appointed tax agents, usually their accountant or tax advisor, payment arrangements can be agreed directly with the agent, on the taxpayers behalf. Alternatively, taxpayers can contact HMRC direct and details are available on their website www.hmrc.gov.uk <http://www.hmrc.gov.uk> .

Sarah Arnold is director of tax at RMT Accountants & Business Advisors. For more information or any other tax related queries please contact Sarah Arnold on 0191 2569500 or email sarah.arnold@r-m-t.co.uk or visit www.r-m-t.co.uk

This was posted in Bdaily's Members' News section by Ruth Mitchell .