Over the last three to four months it’s becoming clear that HM Revenue & Customs have shifted their stance on time-to-pay applications. In the first quarter of 2010 HMRC has rejected more than twice as many VAT time-to-pay applications than in the same period last year.  Time-to-pay arrangements were originally intended to offer short term help. Now HMRC appear to be setting out their stall to show they are going to be much stricter when applying the rules of the scheme and that they have no intention of acting as bankers to small businesses in the longer term.

The effect on SME’s is clear. Any company experiencing cashflow restrictions is going to run into a wall if they don’t have the ready funds or don’t meet the time-to-pay application criteria. This will be especially true for companies which fail to forecast or plan ahead.

At a time when business needs support from Government and banks this is distressing news. However there are still options for SME’s. A&T Business Associates Limited offers Selective Invoice Discounting which enables businesses to release cash locked in individual invoices.  Utilising the value of a debtor book in this way will help business meet the immediate demands of HMRC without having to sign up to any long term finance agreements. This is a valuable service which could be the lifeline many businesses are looking for.