During 2009 there was a growing fear that the UK would experience unprecedented levels of business failures, resulting in rising unemployment and a deepening of the economic crisis. In an effort to counteract the threat the government introduced the TTP scheme to allow business’s to defer PAYE, VAT and National insurance for up to six months. To date the scheme has enabled 250,000 companies to defer around 4.3 billion in tax payments. The problem is when the deadline for payment comes will it be too much for some business’s to withstand. The fact is it has been relatively easy for companies to enter the scheme. Has it simply delayed the higher rates of insolvencies we were expecting only to reveal themselves later in 2010. Following swiftly in the footsteps of initial recovery signs, the HMRC has tightened its reigns on recovery. Companies participating in the scheme may now find themselves pressed harder by HMRC to pay up.

On the 6th April HMRC introduced an independent qualification review to ensure only companies who can show potential to afford the repayments can join. Companies unable to fulfil the tougher entry requirements may well find themselves more susceptible to insolvency particularly with HMRC acting more aggressively in collecting crown liabilities.

What is clear is that 2010 will be a challenging year for most. Directors need to remain vigilant particularly if the recovery gathers momentum and confidence continues to grow, demands on working capital historically increase during this time as directors expand their operation to increase sales. Whilst we embrace recovery Directors need to be mindful of who they do business with and remain cautious particularly when bringing in new clients and ensure their existing clients are controlling their risk accordingly.