HMRC Time to Pay (TTP) Arrangement

HMRC Time to Pay Arrangements offer businesses experiencing financial hardship a flexible and structured payment plan for managing their tax debt over an agreed-upon timeframe.

These agreements, forged between a business and HM Revenue and Customs, provide much-needed breathing room for companies struggling to make ends meet.

While HMRC doesn’t always readily approve payment plans, they also recognize that businesses sometimes require assistance under challenging circumstances.

Falling behind on HMRC payments, whether for PAYE, VAT, or Corporation Tax, is never a prudent decision. When HMRC begins pursuing debt collection and exerting pressure, it’s easy to fall into despair and believe insolvency is the only outcome. However, HMRC Time to Pay Arrangements offer a lifeline, allowing businesses to navigate difficult times and regain financial stability.

time to pay arrangements

The notion that HMRC is inflexible in payment plans is often inaccurate. They are generally willing to work with businesses to establish a payment plan, ensuring that taxes are ultimately paid while supporting the survival of small and medium-sized enterprises. Effective negotiation with HMRC hinges on open communication, accurate information, consistent and transparent conduct, and, in some cases, the assistance of experienced negotiators familiar with HMRC’s procedures.

With extensive experience assisting small businesses in negotiating Time to Pay Arrangements, our streamlined process and affordable fees make us an ideal partner to help you navigate this process.

What is the process for setting up a Time to Pay arrangement with HMRC?

If you are unable to pay your taxes on time, you should contact HMRC immediately to discuss a time to pay arrangement. Avoiding HMRC will only make the situation worse and could result in additional penalties. A time to pay arrangement will typically last for twelve months, but all other taxes must still be paid on time. If you default on a time to pay arrangement, you may lose HMRC’s confidence, which could limit your options for settling with them in the future.

Is HMRC able to deny a payment plan?

While HMRC can refuse a payment plan, it’s not a guaranteed denial. To increase your chances of approval, provide a compelling reason for your inability to pay the tax bill on time and a clear plan for repaying it during the agreement. Demonstrate your financial situation with evidence of ongoing expenses and projected income. Convince HMRC of your commitment and determination to settle the debt in full. Expect to set up a direct debit for monthly installments. Previous TTP arrangements may affect your approval chances.

Only Agree to 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.


Negotiating a Time to Pay Plan: Maximizing Your Chances of Success

To maximize your chances of agreeing to a Time to Pay Plan (TTP), demonstrate your financial capability to meet the agreed-upon installments by providing a detailed cash-flow forecast. HMRC will also evaluate your compliance with their regulations, considering your past tax returns and your ability to adhere to the TTP terms. Additionally, your business sector will be assessed, as certain industries may be deemed higher risk due to historical payment patterns. A prior TTP arrangement may not automatically disqualify you, but it may increase the difficulty of securing another one.

Does Interest Apply to Deferred Payment Agreements?

As of 2021, it is 2.6% per annum


Time to Pay (TTP) Arrangements: Understanding the Limits and Requirements

While HMRC may grant TTP arrangements beyond the standard 12-month period in exceptional circumstances, these instances are rare and typically require strong justification.


The Consequences of Defaulting on a Payment Plan with HMRC

HMRC’s willingness to work with you may quickly vanish if you fail to adhere to the agreed-upon payment plan. The payment plan may also be revoked if additional taxes are not paid when they become due. If you consistently miss payments, HMRC will likely terminate the Time to Pay Arrangement and potentially impose penalties.

Avoiding this situation is crucial as it could lead to legal action. Legal action may result in a Distraint Order Notice, where HMRC announces their intention to seize your company’s assets or serve a Winding up Petition on the company. This Winding up Petition triggers the compulsory liquidation of the company and can have severe repercussions for directors. If you find yourself in this predicament, seek immediate counsel from an insolvency practitioner, such as ourselves.


How to Negotiate a Time to Pay Arrangement with HMRC

Before contacting HMRC, gather the necessary information, including your reference number, bank details, and a detailed explanation of your efforts to pay the outstanding bill.

Contact Information for HMRC Payment Support

  • HMRC Business Payment Support Service (PSS): 0300 200 3835
  • HMRC Time to Pay Phone Number: 0300 200 3822

Professional Assistance for HMRC Settlements

If you require professional assistance in negotiating a settlement, contact our dedicated HMRC department at 0121 769 1915