The scale of the collapse of one of the largest construction companies in the UK is such that the consequences will ripple through the rest of the construction sector for some time. Many businesses will be caught up in the immediate aftermath; many more will not know that Carillion is one of their key clients’ key clients, etc., etc. And Carillion’s interests extended well beyond construction.
With a view to the impending 31 January Self Assessment payment deadline, HMRC’s Business Payment Support Service has announced that it is willing to help businesses caught up in the aftermath, such as:
- Agreeing instalment arrangements if taxpayers are unable to pay tax on time following the Carillion collapse.
- Suspend any debt collection proceedings.
- Review penalties for missing statutory deadlines.
- Reduce any payments on account.
- Agree to defer payments due to short-term cash flow difficulties.
Having spoken to HMRC on this, our understanding is that there will not be any special measures for taxpayers affected by Carillion’s liquidation specifically, but rather that HMRC realised that the events of the last few days may well have come out of the blue for many businesses and it wanted to broadcast that it has a system to help, if people need it.
I am also told that HMRC currently has 1.5million Time To Pay arrangements in place.
HMRC mentioned that it can also assist with Tax Credits, if people’s incomes look set to fall due to (e.g.) Carillion’s failure.
Purely from a tax perspective, we might also suggest:
- If losses will arise, then they can be recognised and claimed – potentially with scope to claim back tax already paid for this and previous tax years, depending on circumstances.
- If profits will fall then so will tax bills – a review (and reduction) of the impending personal tax payments on account for 2017/18 may be appropriate
- Where personal incomes will fall, then it would be appropriate also to consider the effects on Child Benefit entitlement (where it had previously been ‘waived’ on the basis of a parent’s / guardian’s adjusted net income being too high) and whether or not its payment should be reinstated
- For some employees, entitlement to tax-free childcare vouchers MAY be adjusted, (increased), depending on when reviewed and the anticipated effect on relevant incomes and the likely marginal tax rate then applicable to earnings
Top marks to HMRC for trying. It may be quite daunting for those with little or no experience of dealing with HMRC directly, but I think it is fair to say that HMRC’s approach towards those who appear to want to pay but cannot, is worlds apart from those who can, but don’t.
The service is open seven days a week between 8.00am and 8.00pm on weekdays, closing at 4.00pm on Saturday and Sunday: 0300 200 3835.
For more information on the support available please go to www.gov.uk/government/organisations/hm-revenue-customs/contact/business-payment-support-service