Despite the new year bringing with it renewed optimism, the effect of the COVID-19 pandemic is still affecting businesses across the country every single day. The recent end of the government’s furlough scheme has put renewed stress on these struggling company owners. Many of which are now considering their options as a result of the growing financial burdens in these unpredictable times. 

A HMRC Time to Pay arrangement could represent a lifeline for a business that finds itself unable to repay its tax debt. The pressure financial difficulties can put on an owner can have a knock-on effect on their home life, their health, their company, and its employees. 

Making a compromise with HMRC on a Time to Pay agreement is a chance for some breathing room from this pressure and stress. It also represents an opportunity for a struggling firm to turn its fortunes around, pay off its liabilities at a more manageable level, and set itself up for a more sustainable future.

What is the HMRC Time to Pay Scheme

The HMRC Time to Pay Scheme is a formal agreement made between the tax office and struggling businesses, in which the company is granted up to 12 months to pay their outstanding tax bills. This affords indebted firms additional breathing room when they need it most to try and get their affairs in order. 

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All forms of taxation can qualify for the HMRC Time to Pay (TTP) scheme, but it is most commonly used to repay Corporation Tax, VAT, and PAYE. 

TTP allows firms faced with financial difficulties to spread their repayment across a more manageable time frame — thus limiting the stress that is often associated with debt. It also helps to increase company cash flow in the short-term, allowing for far more flexibility when handling outgoings like wages, rent, and inventory. 

It is recommended that any business struggling with tax arrears seek out independent advice before committing to any repayment schemes.

HMRC Time to Pay Guidelines

When applying for the HMRC Time to Pay arrangement, there are certain guidelines that you must follow. These are in place to prove the viability of each candidate, and ensure that they would actually be able to afford repayments without risking liquidation. The requirements HMRC will consider when determining the viability of a candidate would be: 

  • Reliability: Does your business have a history of late filing of taxes, or fines? This could be seen as a sign that you are unreliable and inappropriate for HMRC assistance. 
  • Risk: Certain industries and sectors will be considered more unreliable than others. Businesses in these fields may be considered too high a risk for support. 
  • History: Have you been forced to take out a Time to Pay arrangement in the past? This could put you under further scrutiny during the application process.

How to Make a HMRC Time to Pay Agreement

When seeking to make a Time to Pay agreement it is advised that you contact HMRC via either their telephone helpline or in writing. It may be prudent, however, for you to contact an independent expert who can use their expertise and experience to liaise directly with HMRC and to negotiate a favourable TTP agreement on your behalf. 

clocks shaped like cogs to signify process of liquidating a company with no assets

During the proposal stage, there are a few things HMRC will assess to determine your viability as a candidate, these include:

  • Company cash flow data 
  • Explanations as to why you are unable to pay the outstanding amount 
  • How much you are willing to offer (it is key that you are as honest as possible with this offer — HMRC will not agree to an arrangement unless they are relatively confident that you will be capable of keeping up with the payments.) 
  • How viable your business is in the long-term
  • How likely it is that a Time to Pay agreement would be a success

During the call, HMRC will advise you of your rights within the agreement as well as discuss with you the possible penalties that could arise should you fail to keep your side of the deal, or if it is found that you have misled HMRC at any stage of the process. 

It is also possible for an independent expert to liaise directly with HMRC to negotiate a favourable TTP agreement on your behalf. 

What to do if HMRC Refuse Time to Pay Requests 

HMRC has a duty of care to consider any and all proposals. They are not, however, required to authorise any request, no matter how severe a business’ arrears may be. Should your TTP request be refused it is important to  have expert guidance on hand as a thorough audit of company finances is likely to be the next step. 

Once a detailed and comprehensive audit of firm finances has taken place and the appointed expert has made their assessment it is possible to revive the time to to pay arrangement proposal. An insolvency practitioner is able to approach HMRC again on your behalf, with this new evidence paired with the experiences a practitioner will have dealing with HMRC it is possible for TTP to be approved the second time round. 

Should your application be refused a second time it is possible that an insolvency practitioner may suggest alternative forms of corporate recovery/insolvency processes. A common type of business recovery in this situation is a Company Voluntary Arrangement (CVA), which can act to force HMRC to reconsider their stance as a CVA would lead to any repayment being spread across a significantly longer timeframe. 

Need HMRC Time to Pay Guidance? Inquesta Can Help

Inquesta is proud to boast a team with decades of experience providing expert, dedicated tax debt solutions for clients from all manner of industries. This experience has allowed us to build an extremely fruitful relationship with HMRC, that delivers excellent results for all parties. 

You can be assured that with Inquesta’s tax debt solution service every single thing will be taken care of. When it comes to the future of your business, we feel that this trust is invaluable to providing you with the guidance that you need. 

We can enter your situation delicately, without rocking the boat, and conduct a thorough investigation into the intricacies of your financial situation. We are ready to assess what options are open to you and make  recommendations on what the next step should be based on our past experiences. Then, once you have made a decision, we will lighten the load for you, help you get your finances back on track, and provide you with peace of mind. 

Get in touch with one of our insolvency practitioners today for guidance with your HMRC Time to Pay Arrangement, as well as advice on any corporate recovery/insolvency issues. For more information book a free consultation or contact our team today.