Contact HM Revenue and Customs (HMRC) as soon as possible if you have missed your payment.

If you cannot pay because of Coronavirus Call the HMRC Coronavirus helpline.

HMRC Coronavirus Helpline Telephone: 0800 015 9559 Monday to Friday, 8 am to 8pm Saturday, 8 am to 4pm

As a response to the escalating coronavirus crisis the government has announced a raft of measures aimed at supporting businesses across the country as they deal with the ongoing Covid-19 outbreak and the knock-on effect to their business. As part of a support package announced during the March 2020 budget, it was confirmed that the existing HMRC Time to Pay scheme will be extended to give more companies a helping hand when it comes to managing their tax affairs. The Time to Pay arrangement gives companies additional breathing space during which to settle their existing HMRC liabilities, something which could be invaluable in the current climate while businesses adjust to the unexpected and rapidly changing circumstances.

Businesses up and down the country across a whole range of sectors are expected to be negatively impacted by the continuing crisis whether through a downturn in trade, decreased productivity due to staff absences, through enforced periods of temporary closure, or a combination of all three. This has the potential to weaken cash flow and cause previously profitable businesses to fall into arrears.

While these are undoubtedly challenging times, it is good to remember that help is out there and business owners are encouraged to take action as soon as they are aware they could be in danger of experiencing financial difficulties.

What Is a Time to Pay (TTP) Arrangement

A TTP Arrangement allows for your debt to HMRC to be paid back in monthly instalments, typically over a period of up to 12 months. Although depending on your business circumstances and affordability, some arrangements can be agreed over longer periods. If you are having trouble paying your tax bill, or you foresee yourself struggling to be able to meet your tax obligations in the future, you should contact HMRC at the earliest opportunity, or contact us for specialist advice.

Whilst it is true that you are much more likely to have a Time to Pay arrangement request agreed to if you have conducted your tax affairs well in the past, i.e. by being up to date with what is due, we can still look to help even if you have a poor compliance history with HMRC.

How Much ‘Time to Pay’ Will I Be Given

First and foremost, when considering the possibility of a TTP arrangement, HMRC will look at the ongoing viability of the company in question. They understand that even well-run businesses experience cash flow problems from time to time, and are therefore willing to listen to those businesses in genuine financial difficulty who have done their best to keep up to date with their tax affairs. A Time to Pay (TTP) arrangement is set for a defined period, but each case is judged on its own merits so the length of time given does vary from company to company. A TTP arrangement lasting more than a year is rare but achievable, dependent on the circumstances.

Principles and Guidelines of Time to Pay

Entering into a TTP arrangement does not reduce the total amount of tax owed, it simply allows for the balance to be cleared in instalments. Here are a few of the key principles and guidelines of TTP:

Customers MUST make a reasonable proposal in terms of what they can afford over a specific time period
HMRC needs to be satisfied that you (the customer) will not have the ability to meet the tax due date
TTP is to provide extra time for those companies experiencing financial problems, not for those wishing to use the money elsewhere
If the company’s financial circumstances change in any way, either for the better or the worse, you must notify HMRC immediately
The instalments are to be over the shortest time period reasonably possible
HMRC’s decision is ‘risk based’ so if there is a greater amount of risk, they may require further information before reaching a decision
Keep in mind that the most important stipulation is that your company lacks the ability to pay its taxes on time. HMRC will not agree to a TTP arrangement for any other reason.

Entering into a TTP arrangement will ensure you do not face the late payment penalties HMRC impose on those that do not pay their tax bill on time. However, you will be charged interest on the amount of tax still outstanding.

Can HMRC Break the Agreement

According to law, once agreed to, HMRC must keep to the arrangements except under exceptional circumstances. If there are any changes in your company’s situation which means it is no longer supportive of the TTP plan, they have the right to withdraw. Honesty is imperative and if HMRC discover that you have falsified or misled them in any way during the application process, they can, and often will, terminate the agreement. If you default on the payments they can break the agreement and of course, if your situation worsens they will reassess the amount of risk. Remember, Time to Pay is for temporarily distressed companies that have the capability of future viability. If you should be wound up by a creditor or are on the verge of becoming wound up, any outstanding TTP agreement may very well be cancelled.

If the problems of your company are related to an outstanding HMRC tax debt, TTP could make all the difference when it comes to the ongoing viability of the business. However, depending on the financial situation of the company on the whole, this will not be an adequate solution for every situation. If debts are large or there are creditors in addition to HMRC, an alternative recovery plan may be necessary.