The number of companies seeking an arrangement to postpone payment of their VAT bills by increasing their time to pay (TTP) to the taxman has declined substantially since the peak of January 2009.
According to figures from HMRC (HM Revenue & Customs), demand for TTP for VAT in September 2010 is only 57% of the figure from the previous year and 61% in terms of value.
But while the overall number of arrangements for VAT, Corporation Tax, PAYE and ITSA, through the Business Payment Support Service (BPSS) are falling, there has been a rise in the number of those that were refused. From January to September, 5.2% of TTP requests were declined, compared to 2.6% in 2009. In total, 13,900 TTP requests worth £810m have been declined.
Since the formation of the BPSS in November 2008, it has granted 371,200 arrangements worth £6.38 billion. Just under half of the arrangements were for VAT, accounting for 50% of the total value. Over 226,100 arrangements were for values of £10,000 or under with a total value of £950m and 137,500 were for tax between £10,000 and £100,000, valued at £3.81bn. There were 7,620 arrangements for more than £100,000 with a total value of £1.63bn.
HMRC revealed demand for the service "has generally declined since its peak in January 2009...the underlying trend is for a decrease in demand. When comparing the demand between January to September for both years, 2010 is at approximately 60% of that observed in 2009".
The figures demonstrate the wide usage of the service and highlight why the Forum of Private Business (FPB) was so concerned back in June when there were suggestions the scheme could fall victim to the coalition's Emergency Budget.