DMBM800130 – Time to pay: Corporate debt pre-referral questionnaire

Purpose of questionnaire

The questionnaire has two purposes.

Firstly, it is a check list to make sure the appropriate information is available to Operational Accountants when papers are submitted to them for advice (see DMBM 800250).

Secondly it is useful as guidance in trying to find out whether a customer is a genuine can’t pay case or not.

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)Where the information cannot be provided immediately the customer/accountant should be asked to provide it by telephone as soon as possible. Anyone unwilling to provide the required information should be told that their request for assistance cannot be considered without it.

You will have asked some of these questions already as part of your telephone debt management techniques in finding out that the business is a ‘can’t pay’ . It is still necessary to record the answers as part of the process of gathering evidence.

The questionnaire

1.	What is the problem? What are you doing about it? How much can you pay today? [A lack of cash is not a reason for non-payment; it is a symptom of an underlying problem.]
2.	How much do you owe HMRC including where appropriate any debts due from associated businesses within the group? PAYE/NIC VAT SA COTAX Other Indirect Tax Is your company or any associated company within the Group subject to the VAT Payments on Account regime managed by the large Payers Unit at Liverpool?
3.	What are your reference numbers for each tax category?
4.	Have you been in contact with any other offices concerning this debt? Which offices and who did you speak to? What action are they taking now?
5.	Is any refund due for any tax and have you taken all necessary steps to get this refund?
6.	Have you ever had time to pay any HMRC debt before? If yes, when was the last time?
7.	What does the business own? What is the value of these items? Is there any outstanding debt on these items? Have these items already been used as security on borrowing?
8.	What is your bank balance now, on all business accounts?
9.	What is your overdraft facility?
10.	Have you approached your bank for help? If you have, what was their reaction?
11.	What is your proposal to settle the debt, in terms of how much you will pay on what dates?
12.	What changes are you making so that you can pay this debt off in the time you have stated?
13.	What is your usual annual turnover? Do not include VAT in this figure as VAT does not form part of your income, but is a tax levied on top of your sales. Turnover is normally shown in a Profit and Loss Account without any VAT. The figure can be read directly from a profit and Loss Account prepared by your accountant. It is sometimes called Sales or Income or Revenue.
14.	What is your turnover likely to be in this year, excluding VAT?
15.	Have you reduced your costs in this year? How have you done this?
16.	Are you able to invest any of your money into the business?
17.	Have you prepared a cash flow forecast for the business to cover the length of the proposal plus another three months? If you have does this: take everything into account; show that you can pay the instalments you have offered; pay all future debts as they fall due; and use your banking facilities to the full but stay within their limits? If you haven’t, or if the forecast does not satisfy the criteria stated above, the proposal may not be accepted until one has been prepared which does satisfy the criteria. If a forecast cannot be prepared to meet these criteria, time to pay cannot be justified

Where the proposal exceeds six months and documentary evidence is to be sent into HMRC then additional questions should be asked and discussed:

18.	What does the business actually do? What does it sell? Who are the customers? What does it buy? Who are the suppliers? Does it make anything or is it a service industry? Does it have production premises or a warehouse, or is the majority of work office or home based?
19.	How much is owned to the business now and who owes this money? Is any money owed other than from customers? Who owes this money and why can’t it be collected now? When will it be collected?
20.	How much does the business owe now, who does it owe this money to and when will it be paid?

Documentary evidence

The following documents may be asked for:

A	A cash flow forecast which covers the period from the current month, to three months beyond the end of the time to pay request. This should be available immediately as question 16 should have found that it has been prepared. It should be e-mailed if possible or faxed to you immediately after the phone call.
B	A letter from the bank showing the banking facilities available to the business. This should be available as banks usually send one out each time an overdraft is renegotiated or renewed.
C	The latest available Annual Accounts most probably prepared by an accountant on behalf of the business. If the business is a limited company, it is essential that these are the full financial statements and that they include the detailed Trading and Profit & Loss Account, usually found at the back of a set of accounts.
D	Management accounts for the period from the last Annual Accounts up to as recent a date as possible. These will probably be prepared internally and can be presented in whatever form is most convenient for the business.
E	A forecast Profit & Loss Account and Balance Sheet for each month of the time to pay request period. If the business has any other information, which may support their case, it should be submitted. This may include a business plan or proposal for restructuring prepared by a specialist adviser. If the business cannot provide some or any of this information, and it is considered necessary because of the level of debt and time asked for, then time to pay may not be granted. Instead, other means of recovery may be considered. This may include seeking to close the business so as to make sure no future debt is allowed to increase.

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