Member Article

HMRC tax support plans welcomed by Sheffield expert

LEADING Sheffield financial expert Deborah Lockwood has welcomed the government’s announcement of a softer approach to tax collection in the wake of the Covid-19 pandemic.

HMRC has confirmed that it will take an understanding and supportive approach to dealing with companies emerging from lockdown who have tax debts or are concerned about their ability to pay their tax.

Even if customers cannot pay anything straight away, HMRC is offering alternatives including a short-term deferral, which means nothing would need to be paid for a set period of time, and that there would be no further action to collect the tax debt until that time had lapsed.

The department will also discuss other forms of support, including Bounce Back loans, Coronavirus Business Interruption Loans and agreeing repayment holidays or extending repayment terms.

“After a year of uncertainty and even fear within many areas of the business community, it really is good to hear that HMRC is being so proactive in its support of those people who have very real worries about how they are going to face their latest tax demand,” said Deborah, a director of Sheffield business turnaround and insolvency practice Graywoods.

“HMRC are actively looking to work with and support businesses as they re-open and begin the process of recovery from the pandemic and that really does have to be welcomed.”

At the same time, though, Deborah warned that a more understanding approach to HMRC repayments does not mean that bills will be written off.

“What we have seen in the past is directors and business owners entering into time to pay agreements with creditors and taking on additional borrowing without assessing the full financial position of the business,” she said.

“They forget that moving forwards, they will not only have to pay ongoing liabilities when they fall due but also all sums that have been agreed under time to pay agreements.

“Businesses that may have been struggling before Covid will reach out for the support packages but will actually find themselves taking on an additional burden.

“It is important that owners and directors are able to demonstrate that they have acted legally and properly and they should be ensuring that they have prepared a long term realistic cash flow projection to support their decision making process.

“That’s why it has never been more important to seek proper advice and work closely to create a full business review.”

This was posted in Bdaily's Members' News section by John Highfield .