Time To Pay: reviewing proposals: ongoing viability
When reviewing a Time To Pay (TTP) request we need to consider if the customer is able to make the payments that they propose and meet any ongoing liabilities during the arrangement.
Some liabilities will not, or are very unlikely to re-occur. For instance VAT liabilities where a customer is now de-registered, or SA liabilities were a customer is no longer self employed and has sufficient tax collected at source.
We always expect any TTP arrangement to be as short as possible, but in these cases if a customers situation means that they need a longer timescale to pay the debt we should base any arrangement purely on ability to pay.
Where a customer requests TTP and there are on-going liabilities we must be certain that the customer can meet these on-going liabilities before agreeing TTP. Some liabilities are due monthly and if a customer cannot meet these liabilities debt can accumulate very quickly and we do not want to expose the Exchequer to unnecessary risk.
When considering viability you will be basing your decision on the information that you gather from the customer. What you will be looking to establish is the reason why the customer can’t pay and what they are doing about this in the future.
When finding out why the customer can’t pay you will need to consider how serious the problem is and how long it is likely to last. Previous payment problems may be more symptomatic of a deeper problem.
You will also need to take into account what the customer is doing to correct the problem and judge if the customer is being realistic. If the customer thinks they will be able to trade through difficulties by increasing sales you will need to establish if they have signed agreements or are just bidding for new contracts.
If a customer is advising that they will reduce costs you will need to find out how they intend to do this, and how long this will take. Reducing staff, downsizing premises and other restructuring can take some time to realise savings.
Change in circumstances
In some cases the customer will advise you of an anticipated change of circumstances that will affect their ability to pay. Often the customer will be offering a lower amount initially followed by larger payments after the anticipated change in circumstance. Where this is the case you should find out about the change the customer is anticipating and question them about this to find out how realistic this change is, and what impact this will have on their ability to pay. You should consider requesting documentary evidence to support any claims made by the customer.
In all cases like this you should ensure that you set review dates with the customer. The customer must contact us by the review dates to advise of the current situation and their ability to pay. Where the customer does not contact us or their situation does not change in the way they anticipated then any arrangement may be cancelled.