HMRC Time to Pay
A realistic instalment proposal may help a business address overdue tax while meeting its ongoing commitments.
Can HMRC agree a payment plan?
HMRC may agree to overdue tax being paid in instalments when a business cannot pay in full. The proposal is assessed on affordability and the company’s circumstances. There is no automatic entitlement to a particular repayment period.
A useful starting point is to establish exactly what is owed for VAT, PAYE, Corporation Tax or other taxes, check that returns are up to date and identify any enforcement deadlines. New liabilities must be included in the cash-flow forecast alongside the arrears.
Further reading: HMRC guidance on payment plans.
Preparing a credible proposal
Build the proposed payments from what the business can sustainably afford, supported by current financial information. HMRC may ask about income, expenditure, assets, available funds and other borrowing. Explain why the arrears arose and what has changed to prevent them increasing.
Do not offer an amount simply to secure agreement if it cannot be maintained. A plan that misses payments or ignores new taxes can fail. Keep records of discussions and make sure everyone responsible for company payments understands the agreed dates.
If HMRC has already escalated the matter
A warning letter, enforcement visit or winding-up petition needs a response that reflects the actual stage reached. Negotiating instalments does not automatically suspend court proceedings or enforcement. If a previous proposal has been refused, review the reasons and the supporting evidence before approaching HMRC again.
Start with the facts
Bring a current picture of debts, assets, cash flow and any creditor deadlines.
- Latest accounts and bank balances
- HMRC and supplier arrears
- Court papers or enforcement notices
- A short cash-flow forecast
Questions about your options
The period depends on HMRC’s assessment and the business’s ability to pay. Do not assume a fixed term will be accepted.
No. A petition needs separate urgent attention, including legal advice where appropriate.
Late-payment interest can continue to apply even when HMRC agrees a Time to Pay arrangement. Include interest and new tax liabilities when working out what the business can afford.
Prepare accurate tax balances, up-to-date returns, cash-flow forecasts and a realistic explanation of the payment difficulty. The proposal should show how arrears and ongoing tax can both be paid.
Let’s talk about your next step
Tell us what is happening. We will help you understand the information needed to assess your options.