Expert comment: HMRC changes Time to Pay arrangements
Nick Haggitt, director of IGF Invoice Finance, comments on the HMRC changes to Time to Pay arrangements
“HMRC’s changes to the Time To Pay (TTP) arrangement, which come in to force this week, may impact small businesses who already struggle financially. By switching payment collection to Direct Debit, these organisations will be required to have enough funds in their account on exactly the right day to deliver the payments required, or face further penalties from HMRC.
The very nature of TTP is to aid businesses that have previously fallen into arrears with their HMRC payments, allowing them to catch up on monies owed, in a more manageable way. Many of these same companies often suffer from a lumpy cashflow , so appropriate preparations must therefore be made for this new system.
Despite the additional pressure these changes may place on some firms, it’s a sign that the Government now believes small and mid-sized companies are able to handle more rigour in their tax payments and repayments, which suggests confidence in the growing economy. Nonetheless, we would equally urge a focus on continuing to extend credit to SMEs and on late payments to SMEs by their large company counterparts. One of the biggest pressures on small firms is not the Government increasing the frequency of tax collections but the ongoing failure of large firms to pay their suppliers on time.”