On a recent call to the HMRC Covid-19 Helpline, it transpired that internal HMRC Debt Management and Banking guidance was updated with effect from 1st July.
In essence the new guidance states that requests for deferrals of tax debt should be resisted in favour of payment plans.
So this effectively means that deferrals should now be a thing of the past and going forward, time to pay arrangements should be negotiated.
That is not to say deferrals have completely disappeared, but it is doubtful we will see many being agreed now and those that are agreed are unlikely to be for three month periods.
For Corporation Tax debt, where there is a plan to lodge a provisional current year losses claim to carry back and reduce the tax debt, HMRC is likely to agree to a short, temporary suspension of collection (say 4 weeks) for the client to consider and lodge the losses claim. One massive caveat though – this depends not only on the full circumstances prevailing, but also on the individual officer who picks up the call. We have definitely found a lack of consistency of treatment from one call to the next.
Time to pay appears fluid for both Corporation Tax and PAYE debt, if a challenge at times. Time to pay deals of up to six months are generally agreed in a single call, up to 12 months are proving a challenge and deals over 12 months are currently extremely difficult to negotiate.
The revised guidance does not appear to affect Self-Assessment as the July payments on account have been automatically deferred to January 2021.
For VAT, payments deferred to Jan 2021 are similarly unaffected, however VAT relating to periods after June 2020 will be due and payable as normal, per the updated guidance here:
A telling phrase from one of the officers we spoke to was that “they need to get their tax in now”.