HMRC TIME TO PAY

Has your business been hit with financial difficulties and finds itself unable to pay off its debts? A HMRC Time to Pay arrangement (TTP) is an opportunity for you to regain some control over your finances, and acts as a platform for prolonged success.

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What is a Time to Pay Arrangement?

A HMRC Time to Pay arrangement (TTP) is a formal agreement between the tax office and a business that is struggling to pay its arrears. If approved, it affords the company with up to 12 months to pay off their debts, instead of in one lump-sum.

Time to Pay arrangements have been a common method for UK businesses struggling to meet their tax liabilities to stay afloat while manageably paying off all debts. They can be used to repay any form of taxation, however it is most common for a TTP to be used to settle Corporation Tax, Value Added Tax (VAT), and Pay as You Earn (PAYE) arrears.

The purpose of a HMRC Time to Pay arrangement is to present an opportunity for a struggling business to turn its fortunes around. The pressure that comes with a company faced with financial issues can have a knock-on effect to all aspects of the business. It can affect relationships with distributors and customers, cause the company to spiral, employees can become jaded, and it can have an effect on the day-to-day home life of directors. TTP can allow some much needed breathing room, a way to curb some of these pressures and refocus the company’s efforts.

If HMRC has a reason to believe that your business is at imminent risk of insolvency, it is possible that they may act to recover funds, closing the door to any support. The purpose of Time to Pay is to support viable companies in need of help, not to allow poorly run firms to get away with not paying their tax arrears.

Being afforded the flexibility to spread tax debt repayments over a much more manageable period of time rather than being forced to repay it in one go, particularly when struggling, allows the company better cash flow so that operations can continue on a more even footing.

HMRC Time to Pay Scheme Eligibility Criteria

There are a series of factors HMRC will take into consideration when weighing up the eligibility of a business. These include:

Consistency: Has your business remained on top of all tax payments? A history of overdue tax filings, late fines etc. would reflect badly.
Initiative: A proactive business that has taken the first step in assessing their finances and seeking to correct a negative trend through Time to Pay will be seen positively.
Risk: Some businesses and industries are what is considered ‘high risk’ due to their industry, or specific situation. These companies may not be considered.
History: A business that has taken out a TTP in the past is not excluded from receiving another. They will however be put under increased scrutiny during the application process.

HMRC have a duty of care that requires them to consider any and all applications they receive. They are not, however, required to accept all applicants. Regardless of how dire the financial position of a company — if they are not eligible they will not be accepted for the Time to Pay scheme.

Tips For Negotiating Time to Pay with HMRC

When negotiating time to pay with HMRC, it is vital that you take the lead and are proactive. Assess your situation, spot the trends and prepare. Make sure that you have all necessary documentation and statistics on hand, ready, before you contact HMRC. Efficiency and professionalism will put you in good stead.

Setting up a TTP agreement can be a complicated process. It is up to the tax office to prove that applicants are not using the scheme to merely avoid paying their tax debts — therefore, they will put every business under scrutiny to ensure transparency.

When negotiating Time to Pay, there are a few things that HMRC will look for from an applying business. These include:

Up to date company cash flow figures and financial forecasts
A comprehensive list of any measures that will be taken to cut company costs to ensure TTP terms can be met
Statistics and figures to show that the terms of the proposal are realistic, and the business will be able to afford them.
Is the company viable? Any candidate deemed not viable will not be considered for the scheme.

Need Our Assistance?

Is your business experiencing financial difficulties and finds itself unable to keep up with tax payments? We can assess your situation and guide you throughout the process of obtaining a HMRC Time to Pay arrangement.

How to Arrange Time to Pay with HMRC

The HMRC Time to Pay process starts even before you pick up the phone. Because the tax office will ask a series of questions to assess your eligibility, it is important to understand your position and what will be expected of you from the outset. Once agreed, you must keep up with repayments or contact HMRC if something comes up.

Understand your Situation

It is important that you gain a clear and thorough understanding of your finances. Leave no stone unturned, and no document unread. It is vital that no important piece of information is missed. Make sure you get to grips with your financial situation; such as exactly how much it is that you owe, and when it is/was due.

If you have assessed your finances, it may be possible to arrange a TTP for self-assessment online, without needing to go through the negotiation process with HMRC, provided you fit the following criteria:

You owe no more than £30,000
You do not have any other ongoing forms of payment plan/debt with HMRC
Your tax returns are up to date
It is less than 60 days since the payment deadline

Contact an Expert

Before getting into contact with HMRC it would be prudent for you to seek independent and specialist advice. A registered tax debt solution expert will have experience helping businesses in similar positions as you. They will have the expertise required to take stock of your unique situation, assess the options open to you, and make recommendations as to what they feel would benefit your company the most.

A specialist will also be able to guide you throughout the process of negotiating a Time to Pay arrangement with HMRC.

Call HMRC

When talking with HMRC, there are a few questions you can expect them to ask you, so it is important to be prepared. These include the reference number for the tax bill you are calling about and your company’s bank account details. It is important that whoever makes the call has the authority to set up a direct debit on the bank account.

The tax office will also want to know if your business has any other outstanding arrears, whether you are owed tax payments yourself, and what the current financial position of your company is. In addition, they should ask if you expect your firm’s finances to change in the future, the efforts you have made to raise the necessary funds to pay off your debt, and the steps taken to get your tax affairs back in order.

Assessment

At this stage, HMRC will review all the information collated during the phone call. They will assess whether the proposal is affordable for your business, and if it is the fastest method of repayment possible. If the tax office agrees with your assessment that a Time to Pay arrangement would be best for all parties, it will then decide upon its length. This will depend upon the amount owed, and the specific financial situation of the company. This amount can be altered going forward if any of these factors changes.

It is important during this stage of the process that you do not overextend yourself. You do not want to make any desperate decisions to rid yourself of your debt that could backfire when respite could be imminent from the tax office.

Start of Agreement

Once an agreement is in place, it is vital that you keep up with the payments if you want to avoid your financial situation escalating. In much the same way that HMRC are open to helping struggling businesses in the first place, if the situation calls for it they may be open to altering the agreement if your situation changes. Contact HMRC immediately if any of the following applies to you:

Your situation improves and you are able to increase your monthly payments to pay off the debt quicker
Your situation worsens. It could be possible to reduce the payments
You are forced to cancel the direct debit for any reason. It may be possible for HMRC to restore the arrangement, or renegotiate if needed.
You have a new debt to HMRC. It could be possible to alter your prearranged agreement to include this new debt.

How Inquesta Can Help with a Time to Pay Agreement

Is your business facing financial difficulties that are causing issues when it comes to paying your tax debts? Inquesta possesses a highly skilled team, boasting all of the expertise necessary to assist in negotiating a Time to Pay agreement with HMRC that could help turn your business around, and provide you with some much needed breathing room.

Our specialists have experience providing tax debt solutions for businesses of all sizes, in all manner of industries. This experience means we are perfectly placed to assist you during what can be an incredibly high pressure situation.

You can be assured that with Inquesta’s tax debt solution service, you are working with a provider that you can trust. We have your firm’s best interests at the forefront of everything we do.

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Our Specialist Team

Inquesta’s specialist team have decades of experience guiding business through the process of negotiating a Time to Pay arrangement with HMRC.

Steven Wiseglass

Director of Insolvency

A co-founder of Inquesta, Steven is a licensed Insolvency Practitioner with over a decade of experience in the field. He is a member of the Insolvency Practitioners Association, Association of Business Recovery Professionals (R3), and his insolvency licence is issued by the Insolvency Practitioners Association. In addition, he sits on the R3 committees of the North West Regional Committee.

Steven specialises in advising directors of small to medium-sized businesses, and has a wealth of expertise in providing the most appropriate advice whatever the firm’s circumstances may be. He has also been instrumental in helping company directors save their business and rebuild them into successful enterprises.

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Steven Mason

Insolvency Practitioner

A licensed Insolvency Practitioner, Steven specialises in advising directors of small and medium-sized businesses on their options when faced with financial problems. These include liquidations, administrations, and company closures.

Martin Willock

Insolvency Advisor

Martin specialises in advising directors on matters involving corporate insolvency.

FAQs

Does HMRC Time to Pay Show Up on a Credit File?

No. The repayment of tax debts through a Time to Pay scheme does not involve the extension of credit. Therefore, any debts repaid via a TTP will not appear on your company’s credit file, and will have no long-term impact on your ability to seek out any loans in the future.

How Much Time do I Have to Pay HMRC Tax?

When paying your tax bill to HMRC, you generally have until 31st January to pay off any tax you owe for the previous tax year, and for your first payment on account. Then you have until the 31st July to make the second payment on account. It is also possible to make weekly/monthly payments if this is preferred.

Who to Contact for Negotiating Time to Pay with HMRC

It is possible to arrange a TTP via self-assessment online should you meet certain criteria surrounding the amount of debt owed, the timeframe of the arrears, and more. However, HMRC prefers to be contacted directly over the phone at 0300 200 3835 for any TTP negotiations.