Victims of recent floods in Northern Ireland could receive help from new HMRC power

Monday 25 August 2008

The recent floods in Northern Ireland will have affected many individuals and businesses and left them struggling to cope in the aftermath. Following an event of this scale what can HM Revenue and Customs (HMRC) do to ease the pressure?

What happened following the floods in June and July 2007?

As a result of the severe flooding last year the Chancellor of the Exchequer, Alistair Darling, announced that legislation would be brought in to allow the Commissioners of HMRC (the Commissioners) to waive interest and surcharges on tax paid late as a result of certain circumstances, such as the flooding.

Legislation was duly brought in by Finance Act 2008 that provides that no interest and surcharges will be charged where the Commissioners agree to defer payments of taxes and duties owing to the effects of a disaster designated by the Treasury as being of 'national significance'.

A subsequent order was issued, stating that the floods of June and July 2007 were of national significance and, as a result, backdated the effect of the new legislation to 1 June 2007 to assist those affected.

For the legislation to apply to other events, such as the recent flooding in Northern Ireland, further orders would need to be made by the Treasury if it was considered that the event was one of national significance.

What help could be available to those affected by the recent floods?

It is possible that HMRC will provide assistance to those in Northern Ireland in the same way as it did for those were affected by last year's floods. If so, then those who miss deadlines as a result of the flooding may have interest and surcharges waived.

Other assistance was also provided by HMRC last year as it was acknowledged that some individuals and business would have been badly affected. The types of help offered by HMRC included:

• introduction of instalment arrangements for those unable to pay as a result of severe hardship
• introduction of practical arrangements where individuals and businesses lost records in the flooding
• suspension of debt collection proceedings
• deferment of compliance checks and investigations
• providing help and advice in dealing with other practical tax matters arising as a result of the flooding
• a Helpline for people to call.

How can you find out more?

If you have been affected as a result of the recent flooding then you should contact HMRC or your tax adviser for assistance.

Any announcements by HMRC about help for those affected are likely to be published on its website at www.hmrc.gov.uk

Steven Phillips, Tax Director in Grant Thornton's Belfast office says: "The new legislation is a positive move to help those who have been badly affected by disasters such as severe flooding. However it will only apply where the Treasury considers the disaster to be one of national significance and it therefore remains to be seen what assistance will be provided to those suffering in Northern Ireland."

Phillips adds: "Some businesses may be able to reduce their interim tax payments, knowing that losses will be incurred, which could then be available to carry-back. However they will also need to bear in mind any insurance recovery proceeds that might be received. The farming community has been badly affected with damaged crops, livestock stranded and also livestock having to be kept indoors and fed when they should be out on the grass. These add to farmers' costs and so will reduce profit or even increase losses."

Please click here to contact us if you would like further advice on any of the above.