BPSS demands reviews of £1m-plus requests

New rules for firms wishing to reschedule large tax debts under HMRC’s business payment support service (BPSS) come into effect later this week.

From 1 April, enterprises seeking ‘time to pay’ arrangements on tax debts of £1 million or more must provide an ‘independent business review’ (IBR) in support of their request.

Typically, an IBR will include an appraisal of a number of important areas, including current trading and financial position, projections of profit and cash flow, business and financial strategies, management systems, and funding and banking arrangements.

The IBR must be carried out by a qualified professional advisor such as an accountancy firm or an insolvency practitioner, and be paid for by the firm making the ‘time to pay’ request.

The eligibility rules for the BPSS have not changed in any other aspect, and there is no limit on the number of arrangements an enterprise can make – although the taxman will seek additional information before granting a repeat request.

The BPSS was created in November 2008, near the height of the economic crisis. It has so far agreed around 300,000 arrangements that have rescheduled in excess of £5.2 billion of National Insurance, VAT, PAYE and other taxes.

The Chancellor announced in his pre-Budget report in December that IBRs will be necessary for requests involving sums of £1 million-plus. In the Budget last week, Alistair Darling revealed the BPSS will continue for the whole of the next parliament.

‘In view of the amounts of tax involved, HMRC need to ensure decisions about large “time to pay” arrangements are supported by a comprehensive audit trail, to help guarantee better value for money and fairness for all taxpayers,’ said the  Revenue’s debt management director, Nick Lodge.

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