Ric Miller – head of the Corporate Strategies team, specialists in negotiating Time-to-Pay arrangements (TTP) with HMRC – was a panellist at a recent virtual round table discussion for professional advisers hosted by Leonard Curtis Business Solutions Group and attended by Metro Mayor of Greater Manchester, Andy Burnham.
Ric and his team speak to HMRC every day on behalf of clients who find themselves in some sort of financial distress. He discussed how he’s finding working with HMRC during the Covid-19 crisis, the most frequent issues and questions that are arising, and the impact it’s having on small businesses. He also provided guidance on navigating the situation and the support available to help SMEs get through to the other side of the crisis and beyond.
“We’ve got lots of experience in delaying enforcement action to the point where we can actually put some robust proposals forward,” said Ric. “It’s why clients and their accountants come to us for advice.
A more relaxed HMRC
“We’re finding that HMRC is taking a much more relaxed stance and, on the whole, they’re being really helpful and accommodating – they just ask that we keep them informed and updated.
“We’re talking to them often as we always have done and pretty much all enforcement action – in terms of taking control of goods, distraint or winding up proceedings – is on hold, unless there’s any associated criminal or fraudulent activity. This is partly due to political pressure but also as a result of their own resource constraints because they are working from home too.
Managing new and historic debt
“This is good news for all businesses with debt – whether that’s historic or incurred during this crisis. Many of our clients have a combination of both.
“We have clients currently in TTPs with debt dating back 12 months, and we make sure we check in with them regularly, to make sure that they’re surviving. We’re also in ongoing dialogue with HMRC where there are problems, reaffirming the message that there will be a delay in getting a payment across to them and that they’re getting the necessary specialist support from us to resolve it.
Securing the best possible solutions
“We’re also finding that HMRC is willing to vary agreements for those of our clients with existing arrangements. We’ve had success with securing payment holidays – we’ve pushed it as long as three months with a view to HMRC agreeing to renegotiate at a later date if necessary. Likewise, we’ve been able to build in additional debt if required. We’re also supporting many clients and their accountants with their applications for the government’s Job Retention Scheme, which was launched a few weeks ago.
A look to the future
“We also need to ensure that our clients are planning for the future to gauge – when we’re out of the other side of this and ‘normality’ resumes to whatever extent – how fit their businesses are going to be. Will they be able to defer the next quarter’s VAT? Will they be able to take on the previous costs that they had to be able to continue to trade or will they maybe have to restructure and downsize a little?
“As it currently stands, the VAT debt that falls between 20th March and 30th June 2020 must be paid by 31st March 2021. The process is automatic, clients don’t have to apply for it. So, it’s a given that if debt hasn’t been paid in that due period – or if their direct debit wasn’t collected – then the business gets automatic approval for the VAT deferral scheme.
“My gut feel is that then, once we come out of this situation, those companies that have had to take advantage of this scheme may need to apply for longer-term TTP arrangements – maybe greater than the usual 12-month maximum period. It feels like this will be a necessity for many businesses, particularly those that we tend to come across. My feeling is that HMRC will have to continue to take a supportive stance with those businesses that need some breathing space in order to avoid insolvency.
“Whenever the current restrictions start to be lifted, businesses will have to adjust to a new norm and may find themselves overstaffed for the new level of activity. Business owners can sometimes find themselves in an impossible position of having too high a wage bill but having insufficient cash to cover the cost of redundancies. If this is the case, at Corporate Strategies we can help clients to apply for financial assistance through the government’s RPO Loan Scheme.
“With its main objectives being job preservation and insolvency avoidance, this is a possible route for those companies that are experiencing financial difficulties and need to make a number of staff redundant.
“It’s effectively an unsecured, interest-free loan written to the company when all other avenues – markets, brokers and banks – have been exhausted and there’s nothing left out there for them. No personal guarantees are required by directors and the process is pretty clean in that once the application has been made and approved, all payments go direct to the employees themselves as opposed to the company.
“This redundancy loan scheme isn’t widely known, and eligibility criteria are strict. So, before actually engaging with the Redundancy Payment Service, we would first sit down with clients to ensure they meet it.
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