A recent Freedom of Information Act request revealed that Premier League and Championship Football clubs between them owed nearly £4million to HMRC under ‘Time to Pay’ (TTP) agreements. Such information may soon be a thing of the past as HMRC has advised that it is currently ‘considering the release of statistics for TTP’ and that whilst the review is ongoing it is unable to provide statistical information for the Business Payment Support Service which operates all TTP arrangements.

Since inception of the service the statistical information released by HMRC has confirmed the extent to which businesses have been able to defer taxes due, thereby providing a cashflow advantage to the recipients. HMRC has also been keen to demonstrate the high level of successfully completed arrangements. Without the availability of such information there will be little evidence to support the success or otherwise of the scheme going forward. Recent high profile administrations have revealed the existence of substantial TTP arrangements which have clearly failed and must impact upon the overall success of the scheme.

A lack of information will result in increased speculation as to the future of the scheme not withstanding HMRC is continuing to maintain that the criteria for considering TTP applications has not changed. Whilst a wholesale withdrawal of the scheme must be considered unlikely, a tightening up of the availability of credit may well be in the offing. Additional supporting information and greater monitoring of compliance in respect of applications are likely to lead fewer businesses successfully benefitting from TTP arrangements.

Such uncertainty regarding the strategy of HMRC has not been helped by what appear to be recent mixed messages relating to TTP. Since April this year HMRC has been able to insist on the receipt of an Independent Business Review where the debt involved exceeds £1million. It has recently been reported that only one such report has been delivered and that HMRC did not agree with its proposals. If this is correct then there must be further concerns about the level of recoveries likely to be achieved under the scheme.

The expectation must be that in the absence of positive support by the Government and HMRC, many businesses will fail to achieve the necessary TTP funding and others will suffer the sudden withdrawal of previously agreed facilities leading to an unwelcome increase of business failures in the months ahead. Even if that support is forthcoming, applications for TTP arrangements will be subject to greater scrutiny and hence professional assistance should be considered when making such applications to maximise the chance of success.

Peter Godfrey-Evans is a Restructuring & Insolvency partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Peter you can call him on 01908 605552. 

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The headlines from the statistics released last week by the Insolvency Service focus on the record increase in personal insolvencies. There has been an increase of 24.9% on the same quarter last year and 2009 as a whole is 25.9% up on the previous year.

As far as corporate insolvencies are concerned there are marked differences across the different types of insolvency procedure. For liquidations there has been a 23% increase in cases on 2008 whilst the numbers for administrations, after eliminating anomolies, shows just a 1.7% increase for the year. By comparison to the changes on the same quarter last year liquidations have a 1% fall but administrations a drop of some 34%. A closer examination of the numbers show that across all forms of corporate insolvencies the numbers increased throughout 2009 with liquidations and administrations peaking in the second quarter of 2009. The notable exception was company voluntary arrangements, which are continuing to rise. The reduction in liquidations and administrations is likely to be as a result of the reticence of the banks and HMRC to initiate formal insolvency proceedings during this period with the latter promoting their Business Payment Support Service (so called 'time to pay' arrangements) . There is also a greater willingness to support CVAs to maximise the chance of recovery from creditors.

The key question is what is going to happen in the coming months? History dictates that now that we are technically out of recession we can expect the number of insolvencies to climb in the months ahead. Following the recession of the late eighties and early nineties, the level of liquidations did not peak until 1992. This time around the recession has hit harder and whilst I think there can be little doubt that corporate insolvencies will begin to climb again in the near future and will take a long time to fall back to pre-recession levels, the timescale and the level to which they will rise is more difficult to determine.

Peter Godfrey-Evans is a Restructuring & Insolvency partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Peter you can call him on 01908 605552. 

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As you are probably aware, the HMRC Business Payment Support Service is responsible for running the Time to Pay Scheme to assist businesses with temporary cash flow difficulties. It is rumoured that the fast track service may be closed by the end of this year, although there is no suggestion that the Time To Pay scheme is due to be scrapped altogether.

On speaking direct to the BPSS they have advised that their service was only a temporary line and they were unable to advise for how much longer they would remain open.

If I receive any further information on this matter I will advise accordingly.

Steve Smith is a Restructuring & Insolvency partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Steve you can call him on 01727 869141.

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