HMRC Time to Pay Agreements (TTP)

What is an HMRC Time to Pay Agreement?

An HMRC Time to Pay (TTP) Arrangement is an agreement made between a business and HM Revenue & Customs to pay outstanding tax liabilities via an instalment plan.

These agreements are designed to provide more breathing space for a company experiencing financial difficulty and improve cash flow problems.

A typical TTP will last twelve months, during which other taxes must be paid when they are due.

The key to negotiating a TTP with HMRC is good communication, providing detailed information, being consistent and transparent with what you tell them, and having experienced negotiators who know how HMRC operates if you’re dealing with substantial liabilities.

Negotiating Time to Pay (TTP) with HMRC

When starting negotiations with HMRC for a TTP, our advice is to prepare thoroughly.

Begin the conversation by clearly outlining your company’s financial situation and how it led to the outstanding liabilities. Be transparent and provide evidence to support your statements.

Be prepared to discuss your proposed repayment schedule in detail. This includes how much you can afford to pay monthly, how long you will need to clear the debt, and any steps to ensure your company’s financial stability.

Finally, if you’re unsure how to approach the negotiation or prepare the necessary documentation, consider seeking advice from a licensed insolvency practitioner such as ourselves. We can offer valuable insight into the process, help prepare your proposal, and even negotiate on your behalf.

What will HMRC Require for a Time to Pay (TTP) Agreement?

Pros and Cons of a Time to Pay Arrangement

Is There Interest on Time to Pay Arrangements?

HMRC charges interest on late and early payments per their current guidance document.

Can HMRC Refuse a Payment Plan?

HMRC can certainly refuse a payment plan.

There are no set criteria, but you must have a convincing argument for why you can’t pay your tax bill on time and how you will pay them back during the agreement. They will want to see evidence of your ongoing expenses and projected income. Ultimately, they want to hear commitment and determination on your part to pay them back in full.

HMRC will undoubtedly insist on a direct debit for your monthly instalments.

If you have had a TTP arrangement in the past, this does not preclude you, but it does make you less likely to be accepted.

Can I Arrange TTP Arrangements for Longer than 12 Months?

The HMRC website states they will not accept payment outside of twelve months unless there are exceptional circumstances (such as COVID-19). They also refuse to negotiate the amount owed to a reduced settlement figure.

Will HMRC Agree TTP Arrangements for VAT, Corporation Tax or PAYE?

HMRC can offer you up to a year to pay back your VAT, Corporation Tax or PAYE arrears in instalments, though no longer than this except in exceptional circumstances. Be aware HMRC may want the arrears repaid in a shorter period.

What if you Fail to Keep to the Time to Pay Arrangement?

HMRC’s flexibility will likely come to an abrupt end if you fail to keep to a payment plan you’ve already negotiated. In addition, the payment plan will fail if other due taxes are not paid. If you don’t make your agreed payments, they will probably cancel the Time to Pay Arrangement and possibly impose a penalty.

You want to avoid this situation at all costs because it may provoke legal action.

The legal action could result in a Distraint Order Notice, in which HMRC announces its intention to enter your property and seize your company’s possessions or serve a winding-up petition on the company. If upheld by the judge, this imposes a compulsory liquidation of the company and can have severe consequences for directors.