HMRC is making a lot less Time to Pay arrangements with businesses looking to defer tax payments than it did when the scheme was first introduced.

This could affect contractor accountants assisting clients through a bad patch, and raises the question of whether it’s worth suggesting it at all.

Figures recently released by the Revenue show that 196,200 TTP arrangements were made in the first nine months of 2009, whilst only 114,600 were agreed in the same period this year. That’s a drop of 81,600 or nearly 42%. In the first 9 months of this year, arrangements worth £1.9bn were approved, compared to the £3.4bn approved between January and September 2009.

The Revenue has doubled the amount of requests it refuses, now declining 5.2% of TTP arrangements compared to the 2.6% it refused in the corresponding period last year. In the last 2 years, 13,900 requests for Time to Pay, totalling £810 million, have been refused.

Philip White, the chief executive of Syscap, says this is clear proof that the Revenue is toughening up over deferrals of business taxation. He thinks this could possibly be the start of the TTP scheme winding up.

Figures have not been released to show the number of companies requesting repeat deferrals but the vice president of R3, Frances Coulson, said there was a considerable increase between September 2009 and early 2010. And around 67% of insolvency practitioners saw some companies with TTPs fall into insolvency at the end of last year. Insolvency practitioners are predicting that corporate insolvencies will increase next year.

Since the start of the scheme in November 2008, 371,200 Time To Pay arrangements have been made allowing businesses to defer £6.38 billion worth of tax payments.

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According to a recent survey by online accountants My Accountant Friend, nearly two thirds of IT contractors could be paying too much tax.

The firm surveyed 300 IT professionals in the city of London to assess how they were managing their accounting and tax affairs.

Of those that took part in the survey, 74 per cent were either not paying themselves tax-efficiently based on their employment status or not claiming the expenses they should. 61 per cent of respondents were not sure when key tax payments are due and a further 57 per cent said that they do not fully understand how their end-of-year accounts have been produced or what the figures mean.

Not surprisingly, the subject of IR35 featured prominently with nearly 70% of respondents saying that they are still nervous about the possibility of an IR35 investigation, despite the government’s recent commitment to review it. Graeme Hart, Managing Director of My Accountant Friend, commented on the results of the survey:

“We expected many contractors to be a little apprehensive about their accounting and tax affairs. However, we were quite surprised by both how many people seem to be paying too much tax and the level of concern in some areas.”

According to Hart, My Accountant Friend now provides a number of guarantees around their services. He continued, “we promise to save people tax, increase their take-home pay and reduce the burden. Our online system automates the bookkeeping and provides real-time visibility of personal and corporate tax liability. ”

The firm is currently running a special World Cup promotion. Sign up before the 15th June and they will provide 2 months of accounting services completely free of charge. What’s more if England win, they’ll provide their services for FREE UNTIL 2011. More information can be found on the My Accountant Friend website.

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