are you having problems borrowing in order to pay bills, including your taxes, such as VAT and corporation tax? If so, then HM Revenue & Customs (HMRC) may have a solution for you.

What is the BPSS?

HMRC has set up a Business Payment Support Service (BPSS). This service is designed to help businesses pay their income tax, corporation tax, national insurance or VAT liabilities by allowing payment over a period that is “as long as they need”.

Businesses have always been able to ask HMRC for more time to pay, but the BPSS promises to make this easier by speeding up the process, relaxing conditions and allowing a longer payment period.

What do you need to do?

To take advantage of this opportunity, a business (or its tax adviser) should first check the HMRC website (www.hmrc.gov.uk/pbr2008/business-payment.htm).

If this does not answer the questions sufficiently, they can contact the BPSS helpline well before the date on which the tax becomes payable. The number to ring is 0845 302 1435, and the service is available Monday to Friday, from 8am to 8pm, and on Saturday and Sunday, from 8am to 4pm.

HMRC will only ask for the information it needs to make a decision, such as the business’s tax reference number, details of the tax liability, and basic information on the business’s cash flow and a proposed payment plan. Where possible, they will then arrange to collect these by direct debit payments.

Will the helpline be able to give me an immediate answer on all my tax debts?

HMRC says that, in most cases, it should be able to give a decision in about 10 minutes. Larger or more complicated debts will take longer. In such cases, they will take down the caller’s details and the office will aim to call them back within four working days or sooner.

What would HMRC not consider to be a reasonable time to pay?

HMRC’s approach is to consider all requests and they may need to ask more questions to establish what is reasonable in the circumstances. In some cases, a request may not be reasonable if it does not start to address the size of the debt and the debt is continuing to increase.

How much tax can be paid in instalments?

Decisions will be made on a case-by-case basis and they will consider all requests, regardless of the sums.

What the BPSS does not cover

The BPSS is for new enquiries only. If an HMRC office has already contacted a business about an overdue payment, the business should call that office to discuss further payment options. Similarly, if a business has an existing payment arrangement but is now concerned that it may not be able to meet the terms, it should discuss this with the HMRC office that agreed the arrangement.

However, if a business receives a warning letter about court action and cannot get through to the office that sent it, it can call the BPSS.

What about charges?

No additional charge will be made for an arrangement under the BPSS, and no late payment surcharges will be made for amounts included in an arrangement. Interest will continue to be charged in those cases where it applies. However, the main rate of interest for late income tax and corporation payments was reduced from 6.5 per cent to 5.5 per cent on December 6, 2008, and a further reduction may soon be made.

Any particular points to watch?

One - some late VAT payments give rise to a ‘default surcharge’, but HMRC says that any such charge will be cancelled where the agreement was reached after the introduction of the BPSS.

Paula Tallon is a partner in BDO Stoy Hayward LLP, Chartered Accountants