HMRC Time to Pay Arrangements (Debt Repayment Plans)

HMRC Time to Pay Arrangements are structured payment plans for debt repayment over an an agreed time period. HMRC does not give these lightly but equally they do recognise that in certain circumstances businesses need help. This article will explain their policies on time to pay agreements.

Time to Pay Arrangements for VAT, Corporation TaxWhat is an HMRC Time to Pay Arrangement?

A typical HMRC time to pay arrangement will last twelve months and all other taxes must be paid when they are due or any HMRC time to pay arrangement will be in default. If there is a default, you are likely to lose the confidence of HMRC, which in turn considerably reduces the company’s options to settle with HMRC. With this in mind, it is critical that you seek professional insolvency help for time to pay arrangements. A cash-flow forecast will be needed to prove that the company can afford the vat arrears as well as any taxes that may arise as part of any proposal.

What’s the Criteria for Getting a TTP?

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

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.

Make Sure Your Repay Your Tax Bill in Instalments that are manageable

Do not be pressured into agreeing a monthly amount that you simply cannot fulfil in your time to pay HMRC agreement. Make sure that they understand this – HMRC will have less confidence in you if you simply agree to whatever they suggest and default a month or so later. This is where some time should be spent making sure you can afford to pay the ongoing repayments of tax owed. Inform HMRC that you do not want to let them down by committing to something that you cannot maintain and that you are seeking professional help and advice. Let them see that you are taking matters seriously as the tax arrears belong to the public purse as HMRC see it.

Can I arrange a TTP for Periods of More than 12 Months?

The HMRC website states that they will not accept payment outside of twelve months unless there are exceptional circumstances. They also refuse to negotiate the amount owed to a reduced settlement figure. There are plenty of stories about firms reducing the tax paid from the amount owed – however, whilst there are exceptions to every rule, these stories are mostly fictitious.

You should also keep in mind that HMRC will insist that all other ongoing taxes are paid promptly when due. After all, there is little point in HMRC agreeing to a time to pay arrangement for VAT if you fail to pay corporation tax.

I Am Contesting HMRC Debt, Will This Affect a Time to Pay Arrangement?

You should commit to paying what you can of your time to pay HMRC arrangement whilst the matter is being resolved. HMRC will not waive the right to pursue taxes they know that are owed on the basis that they may have the whole amount wrong.

It is your responsibility to disprove HMRC’s claim for taxes owed and you will be expected to have clear documentation to support your case.

What Should I do about a Threat from the HMRC Debt Enforcement Unit for a Failed Time to Pay Arrangement?

This is the most serious HMRC recovery team and you need to contact us urgently in this case as they will likely look to wind up the company.

To speak with a time to pay specialist, contact us today on 08000 746 757; or you can speak with Sue, our senior consultant on 07949 969 006. You can also use the Live Support feature on the bottom-right of this page.

If you’re having trouble paying your VAT bill, HMRC are open to late payment plans, providing certain criteria are met. They are less flexible around VAT than other areas (such as corporation tax arrears) simply because VAT is the government’s money in the first place, and companies merely tax collectors on their behalf. That said, if you have a compelling reason for not being able to pay and can demonstrate that your business remains viable, there is a good possibility they will grant you the extra time. You’ll need to show them that there’s no way you can pay and that you haven’t diverted any money which could have gone to them into other areas, e.g. taken personally.

What is a Likely Timeline for a VAT Time to Pay Plan?

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

Any Time to Pay arrangement must include assurances any taxes due within the payment term can be paid.

What if you fail to keep to the HMRC 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 tack on a penalty as well. This is a situation you want to avoid at all costs because it may provoke legal action. The legal action will cause what is called a Distraint Order Notice, where HMRC announce their intention to enter your property and seize your company possessions; or serve a Winding up Petition on the company. This Winding up Petition is a compulsory liquidation of the company and can have serious consequences for directors.

How to Contact HMRC about a Time to Pay Arrangement?

Before speaking with HMRC you’ll need to ensure you have all your information to hand, including your reference number, bank details, and a clear explanation of what you’ve done to try and pay the bill so far. With that information in hand, you can reach HMRC on 0300 200 3835.

If you feel you need a professional third party to negotiate a settlement then call 08000 746 757 and speak to our specialist HMRC department.

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