No Time to Pay for 'Tax Planned' Companies

If you are used to taking part of your company income by way of dividends (a common tax planning device, the main advantage of which is savings on National Insurance Contributions), but you require time to pay your taxes because of cash-flow problems, beware.

It has recently been announced that HM Revenue and Customs (HMRC) are rejecting ‘time to pay’ (TTP) applications from companies that pay dividends as part of their remuneration strategy.

HMRC are quoted as saying, “Where a company asks us for a TTP arrangement and we have information or see that they recently paid out a dividend while they were running up a tax debt, we would refuse a TTP on the grounds that they have preferred to use the money elsewhere and the shareholders should support their company…In essence, if a company has spare cash to make non-contractual payments to shareholders then it can pay at least part of its tax debts.”

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.