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06 April 2010

Review for larger “time to pay” agreements will cost an average of £42,500

• From April 6 will be used by HMRC to decide whether to extend credit to businesses

The average cost for the Independent Business Review needed for larger “time to pay” agreements is estimated to be £42,500, says Wilkins Kennedy, the Top 25 accountancy firm.

From April 6 all businesses hoping to defer a tax payment of over £1m under the “time to pay” scheme will need to pay for an Independent Business Review (IBR).

“Time to pay” is designed to allow viable businesses to defer tax payments during the recession.

HMRC has disclosed that it thinks that an IBR will cost as much as £75,000 with the average cost estimated at £42,500.

Comments Anthony Cork, Director of Wilkins Kennedy: “If a company has problems finding the cash to pay its tax bill it is going to find £42,500 a pretty steep price to pay.”

The purpose of the IBR is to enable HMRC to decide whether the company is viable enough to justify a “time to pay” agreement. The IBR would also be used to help determine how generous the repayment terms of the “time to pay” agreement should be.

Says Anthony Cork: “Personally I think the business applying to “time to pay” should try and negotiate down the cost of the IBR with the accountancy firm or insolvency practitioner involved.”

Anthony Cork also says that businesses that do have to pay for an IBR should ensure that the report gives them useful information.

HMRC has proposed that an IBR can include the following: