No Time to Pay for ‘Tax Planned’ Companies

Posted: 6th July 2011


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 to save National Insurance), but you require time to pay your taxes because of cashflow problems, beware.
It has recently been announced that HM Revenue and Customs are rejecting ‘time to pay’ (TTP) applications from companies that pay dividends as part of its remuneratiTax formon packages.
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."