By Steven Wiseglass | Corporate Recovery & Insolvency expert | Licensed Insolvency Practitioner | Founder & Director Inquesta 

First published June 2026.

If your company cannot pay a tax bill that is due right now, the first question most directors will be asking is if it’s possible to pay HMRC in instalments. The answer is yes, you can. But only if you A) act quickly B) meet the necessary eligibility criteria and C) put forward a realistic proposal. 

Discover exactly how HMRC Time to Pay Arrangements work in 2026, what they cover, how to apply, and what your options are if HMRC were to refuse your proposal or if your company’s position is more serious than a simple cash flow issue. Whether you’re dealing with corporation tax arrears, a VAT debt, or missed PAYE, this guide covers your options.

What Is an HMRC Time to Pay Arrangement?

An HMRC Time to Pay Arrangement (TTP) is a formal payment plan that allows your company to clear outstanding tax debts in monthly instalments rather than as one lump sum and pay HMRC in instalments. It is not a debt write-off, a deferral, or a form of relief, it is a structured repayment agreement that HMRC will only grant if it believes your company is viable and that you will honour the terms.

HMRC introduced Time to Pay arrangements as a recognition that viable businesses can face temporary cash flow difficulties. They are not designed to help companies that are fundamentally insolvent or have a persistent history of non-payment.

While interest accrues on the outstanding balance throughout the arrangement, you will not receive additional penalties provided you honour every payment. As a result, the cost of buying more time from HMRC is tangible and compounds the longer the debt remains outstanding. 

Can You Pay Corporation Tax in Instalments?

Yes, corporation tax is one of the most common debts covered by HMRC Time to Pay arrangements. If your company cannot pay its corporation tax liability when it falls due, you can approach HMRC to negotiate a monthly repayment schedule.

HMRC will typically agree to a repayment period of six to twelve months for corporation tax arrears. The key requirement is that your company is viable. You can generally not pay HMRC in instalments if they believe that the business cannot sustain the repayments or has no realistic prospect of recovery.

If your corporation tax debt is above £50,000, or if you have multiple outstanding liabilities across different tax heads, you will need to negotiate directly by telephone rather than applying online. The number for corporation tax missed payments is 0300 200 3840.

Contractors and consultants, particularly in IT and financial services, are disproportionately represented in corporation tax Time to Pay cases, often because project income arrives unevenly. HMRC is familiar with these circumstances and will assess them on their own merits.

Which Other Business Taxes Can Be Paid in Instalments?

HMRC Time to Pay arrangements are available for most business taxes, including VAT, PAYE, employer’s National Insurance, and Self Assessment. One arrangement can cover multiple outstanding liabilities. HMRC will typically want to consolidate everything into a single plan rather than negotiate separate arrangements for each tax.

The main taxes covered include:

  • VAT: Companies with VAT arrears can apply online if they owe £50,000 or less and the debt relates to an accounting period starting in 2023 or later. HMRC made the VAT Time to Pay scheme more accessible in 2024, meaning more businesses now qualify to apply without needing to call. If you use the cash accounting or annual accounting scheme, you will need to call 0300 200 3831 instead.
  • PAYE and Employer’s National Insurance: If you have missed an employer PAYE payment deadline, HMRC may agree to a plan to repay the arrears over time. Call 0300 200 3819 if you cannot apply online.
  • Self Assessment: Relevant for director-shareholders with personal tax arrears of £30,000 or less, provided the request is made within 60 days of the payment deadline. Call 0300 200 3820.

Am I Eligible for an HMRC Time to Pay Arrangement?

HMRC applies a consistent set of criteria when assessing applications. You are more likely to be approved if:

  • The total debt is £50,000 or less.
  • You can clear the debt within 12 months.
  • You have no other active payment plans or overdue amounts with HMRC.
  • All your tax returns are filed and up to date.
  • Your company has a broadly credible record of paying its taxes on time.

HMRC will not approve a Time to Pay arrangement if it has reason to doubt your company’s long-term viability, if it believes you have the means to pay in full but are choosing not to, or if your compliance record suggests the arrangement is likely to break down.

Previous Time to Pay arrangements are not automatically a disqualification. HMRC will still consider a new application. However, it will likely scrutinise your financial position more closely, and a second failed arrangement will significantly reduce your options going forward.

How to Set Up an HMRC Payment Plan

For straightforward cases within the eligibility thresholds, you can apply to pay HMRC in instalments through your Government Gateway account. You will need:

  • Your Unique Taxpayer Reference (UTR) or VAT registration number.
  • UK bank account details for the Direct Debit.
  • Details of the payments you have missed.
  • A clear figure for how much you can comfortably afford to pay each month.

HMRC will typically want the Direct Debit set up on the day approval is given.

If you cannot use the online service; because your debt exceeds the threshold, you have multiple liabilities, or HMRC’s checker indicates you are ineligible, call HMRC directly on the relevant number listed above.

Do not delay. Interest accrues from the day payment was missed, and the longer you wait, the fewer options you have. HMRC’s enforcement powers include Distraint, Country Court action, and Winding Up Petitions. And they become increasingly likely the longer a debt is left sitting unaddressed. 

What HMRC Will Ask You

When you speak to HMRC about paying in instalments, the interviewer will have a number of questions to ask in order to better  understand your position:

  • Why can’t you pay the full amount now?
  • What steps have you already taken to raise the funds?
  • What is the financial position of the business including income, outgoings, assets, other creditors, etc.? 
  • What is the long-term viability of the company?
  • Can you provide cash flow forecasts and a statement of assets and liabilities?

HMRC will use the answers to these questions in order to calculate how much you can realistically afford each month. It will typically expect you to put forward roughly half of your available surplus after essential outgoings — and it will factor in any savings or liquid assets your company holds.

The most common reason Time to Pay applications fail is that the proposed monthly payment is not credible, either because it is too low to demonstrate genuine commitment, or so high that HMRC doubts it can be sustained. Do not offer to pay more than you can comfortably afford. A broken arrangement is a worse outcome than a conservative proposal.

What Happens if HMRC Refuses a Time to Pay Arrangement?

There are several reasons HMRC may reject your proposal to pay in instalements:

  • It doubts the long-term viability of the company.
  • The repayment proposal is not realistic given the company’s finances.
  • There is a pattern of tax non-compliance or missed deadlines.
  • It believes you are choosing not to pay while using funds to repay other creditors.
  • The proposal does not clear the debt in the shortest possible timeframe.

If you have been refused, or if your debt significantly exceeds the standard thresholds, a licensed insolvency practitioner can negotiate with HMRC on your behalf. Practitioners who work with HMRC regularly carry considerably more credibility in these discussions than directors approaching them alone. They will not put forward proposals they do not believe will be accepted, and they know from experience what constitutes a credible repayment schedule.

If HMRC will not accept instalments and the company has a viable underlying business, a Company Voluntary Arrangement (CVA) may offer an alternative route. A CVA is a formal insolvency procedure that allows a company to restructure its debts — including tax arrears — and repay creditors over three to five years while continuing to trade.

In some cases, the prospect of a CVA can bring HMRC back to the table for a Time to Pay arrangement. HMRC understands that a CVA repayment period is substantially longer than a standard TTP, and that a formal insolvency may leave it recovering nothing at all. A realistic Time to Pay arrangement, properly negotiated, is often the better outcome for HMRC as well as for the director.

Learn more about Company Voluntary Arrangements. 

What If You Cannot Keep Up With the Arrangement?

If you miss a monthly payment, HMRC will contact you to understand why. In some cases it will renegotiate the plan. This is more likely if there is a provable, genuine, and temporary reason for the missed payment. However, HMRC has no obligation to do so.

If it determines the arrangement is no longer viable, HMRC can cancel the plan immediately, apply further penalties, and demand the full outstanding balance in one go. From that point, enforcement action becomes significantly more likely — up to and including a Winding Up Petition to force the company into compulsory liquidation.

The moment you believe you will miss a payment, contact HMRC proactively. It is always better to renegotiate before a default than to explain one after the fact.

When a Time to Pay Arrangement is Not the Right Solution

HMRC Time to Pay arrangements are designed for companies with a temporary cash flow problem and a realistic prospect of recovery. They are not appropriate (and HMRC will not grant them) where the company’s underlying financial position means it could not meet its obligations even given more time.

If your tax debts are growing rather than stabilise, if you are unable to pay current liabilities as well as arrears, or if the scale of HMRC debt makes any repayment schedule unworkable, you may be dealing with insolvency rather than a cash flow problem. The distinction matters. Not just for HMRC’s purposes, but for your own legal responsibilities as a director.

Directors of insolvent companies have specific legal duties. Continuing to trade without taking appropriate action can expose you to personal liability for company debts. Taking advice early protects you.

The two most common formal routes for directors in this position are:

  • Company Voluntary Arrangement (CVA): For companies with a viable future that need to restructure debts and repayment terms across multiple creditors, including HMRC. Learn more.
  • Creditors’ Voluntary Liquidation (CVL): For companies that cannot be rescued, where the most responsible course is an orderly wind-down that protects directors from further personal exposure and demonstrates they acted responsibly when they knew the position was serious. Learn more. 

Find out more about HMRC debt and tax arrears support.

Get Advice From a Licensed Insolvency Practitioner

If your company cannot pay its tax bill and you are uncertain whether a Time to Pay arrangement is achievable, or if your proposal to pay HMRC in instalments has already been refused, speak to a licensed insolvency practitioner before the situation deteriorates further.

At Inquesta, we work with company directors facing exactly these circumstances. We can assess whether an HMRC Time to Pay arrangement is viable for your specific situation, negotiate directly with HMRC on your behalf, and give you a clear and honest picture of all available options — including formal insolvency routes if that is what the situation genuinely requires.

Call us on 0800 093 4604, email [email protected], or fill in our contact form and a member of the Inquesta tax debt solutions team will be in touch as soon as possible.

Steven Wiseglass is a licensed insolvency practitioner with over 20 years of experience advising company directors on HMRC debt, cash flow crises, and formal insolvency procedures. Inquesta is regulated by the Insolvency Practitioners Association (IPA) and is a Fellow member of R3, the Association of Business Recovery Professionals.