Do you need more information about time to pay arrangements with HMRC?
Companies or self-employed tax payers that are experiencing cash flow problems and have fallen into arrears have the option of negotiating a Time to Pay (TTP) arrangement with HMRC in order to pay their bill in installments.
In short, this is a payment plan for outstanding taxes, but there are strict criteria for getting one.
Read on to find out more.
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What is a Time to Pay Arrangement?
A Time to Pay (TTP) arrangement is a payment pan with HMRC that spreads tax payments over a longer period of time than normally available.
In addition to Corporation Tax, VAT and PAYE arrears, time to pay arrangements can also be used when directors anticipate cash flow problems with upcoming payments and it may help the company to avoid a late payment penalty if they miss the deadline.
HMRC will always want to make sure that directors are not deliberately trying to avoid meeting their tax obligations. Therefore, it will consider every arrangement on an individual basis, as well as the industry the business operates within and the company’s history of tax repayment.
Do HMRC give you Time to Pay?
When HMRC is satisfied that the company is not trying to avoid its tax liabilities, it will agree to a time to pay arrangement, assuming there isn’t one already in place. They have become increasingly flexible around this since COVID-19.
At this point, it’s vital that directors are realistic about what the company can afford before the plan is agreed, so that these payments are met in full on time for the duration of the arrangement.
If the company should default on a payment, its financial woes will worsen very quickly. HMRC could cancel the TTP arrangement all together, call in the total debt with penalties or make a move to wind up the company.
In contrast, when a TTP is agreed and kept to, interest is charged on the amount to be paid but penalties may be lifted if the company has made contact with the tax authority promptly and acted responsibly to rectify the financial situation.
How Long will HMRC give me to pay?
Time to pay arrangements are typically up to 12 months, but can go up to 24 months in certain cases.
What Information do you Need to Agree a Time to Pay?
Before speaking with HRMC you should have:
- any recent letters they’ve sent you with reference number
- clear documentation about how much you owe HMRC
- proposal about how much you feel you can pay them, over what timeframe
- make sure you’ve submitted all recent tax returns (they ask why, if not)
Hmrc Time to pay Arrangement Contact Number
Set up a TTP online for self-assessment here or call 0300 200 3822.
For limited companies, you’ll need to contact HMRC’s Payment Support Services on 0300 200 3835 (Monday to Friday, 8am to 4pm).
Can HMRC Refuse a Payment Plan?
Yes, HMRC might refuse your request for a payment plan. Typical reasons include if:
- They don’t feel you can pay
- They don’t feel like you’re being honest with them
- You’ve recently had another payment plan
- You are already insolvent
Advantages and Disadvantages of Time to Pay
- They provide breathing space for profitable companies that are having temporary cash flow problems
- Tax repayments are made over a longer period of time
- Insolvency is avoided
- Legal action is averted
- Managing cash flow becomes easier and less stressful
- Agreed payments must be met in full and on time, always
- If a company operates within a high-risk industry, it can affect its chances of negotiating a TTP agreement.
- Interest is payable on the debt
- If the arrangement is cancelled, HMRC may take enforcement action.
Negotiating Time to Pay with HMRC
Companies that are facing temporary cash flow problems and may not be able to meet their tax liabilities can often benefit from the experiences of a HMRC mediator.
HMRC are open to negotiation but this needs to be done in the right way and of course it helps to have the assistance of someone used to dealing with them.
In broad terms HMRC want the economy to be strong and that means keeping as many businesses from insolvency as possible. That said, they generally take a very tough stance if they feel people aren’t being honest or organised with them, and on occasion will wind up a company even at a loss to themselves in order to make an example.