Pre-Budget Report 2009: KPMG welcomes extension of 'time to pay'
HMRC support vital to companies in corporate "accident and emergency"
Wednesday, 9 December 2009
Commenting on the extension of HMRC's 'time to pay' scheme, which gives businesses in distress breathing space in making tax payments, Richard Fleming, UK Head of Restructuring at KPMG, said:
"In an unrelenting recessionary environment, supporting the recovery of businesses in distress is essential in preventing the worst social ramifications of corporate failure seen in the last downturn. With cash still scarce and therefore expensive, the lending community cannot bear the full weight of supporting struggling businesses. While the banking industry recovers, HMRC's 'time to pay' has given businesses in corporate A&E vital time in helping them survive the pain of numerous cash strains.
"However, as we move through the fourth quarter of recession, we cannot be naïve to the dwindling pool of state aid. While HMRC will support struggling businesses as best it can, companies should be aware that this measure cannot be exploited. Where HMRC agrees a payment plan, businesses should be alert to meeting their part of the bargain and not take advantage of HMRC's continued leniency. As recent high profile examples have shown, HMRC will not shy from presenting a winding up petition in court for the appointment of liquidators where they feel a company has consistently shirked their tax liabilities.
Commenting on how the Pre-Budget Report might impact corporate health in 2010, Fleming went on to say:
"The easing of the VAT burden comes to an end in the New Year, which will undoubtedly create a pressure point for many businesses on the precipice and could prove the proverbial hair that breaks the camel's back, particularly for companies in the retail sector where January is traditionally the toughest time of the business cycle. Businesses should also be alert to the winding down of the working capital and trade credit insurance schemes; we have already seen companies that could not take advantage of the schemes tipped into administration. Smaller businesses, however, will be relieved by the exemption on business rates for empty property and deferred corporate tax; an important move in protecting the smallest businesses in distress which inevitably feel recessionary pain more acutely than larger businesses.”
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About KPMG: KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with 11,500 partners and staff. The UK firm recorded a turnover of €2.2 billion in the year ended September 2008. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 148 countries and have more than 113,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. KPMG International provides no client services.