What is a HMRC Time to Pay Arrangement for VAT, Corporation Tax and PAYE?

What is a HMRC Time to Pay (TTP) arrangement?

A Time to Pay (TTP) arrangement with HMRC is a payment plan that provides a company with additional time to settle their tax arrears. Generally, Time To Pay plans extend over approximately six months, although in specific cases, an extension of up to 12 months may be granted. Throughout this period, the company is required to settle all HMRC tax debts, encompassing VAT, PAYE, and Corporation Tax. Additionally, any tax obligations arising during the Time to Pay arrangement must be promptly addressed.

How do I set up a Time to Pay Arrangement with HMRC?

It might be possible for you to negotiate additional time to settle the tax owed to HMRC through a Time to Pay payment plan. This not only provides an extended timeframe for payment but also usually halts the accumulation of further surcharges on your tax account balance.

When a company faces cash flow challenges, meeting tax obligations like VAT, PAYE, and corporation tax often becomes a struggle for directors. Delays in settling limited company tax can raise concerns at HMRC, signalling potential insolvency. This situation triggers worries as HMRC swiftly identifies late payments, leading to penalties and surcharges on the outstanding balance. Additionally, it opens the door to more serious actions, including the possibility of a winding-up petition.

What is a HMRC Time to Pay (TTP) Tax Payment Plan?

A Time To Pay Arrangement enables the repayment of your HMRC tax debt through monthly instalments, usually spanning up to 12 months. Depending on your business situation and financial capacity, agreements can be extended over longer periods if additional time is required. If you encounter difficulties settling your tax bill or anticipate challenges in meeting future tax obligations, it’s essential to promptly contact HMRC or seek specialist advice from us.

Will HMRC Give Me Time to Pay My Tax Bill?

While having a well-managed tax history increases the likelihood of a successful Time to Pay arrangement, we can still explore assistance even if your compliance history with HMRC is poor. It may require more negotiation, but we aim to find a mutually agreeable solution.

If you require additional time to settle your tax bill, a Time To Pay instalment plan could be a viable option for your company. Vanguard Insolvency offers support to business owners and directors considering this approach. However, before opting for this method to address tax arrears, it’s beneficial to understand the process and assess the likelihood of acceptance by HMRC.

Negotiating More Time to Pay Company Tax Debts with HMRC

If you require an extension to settle your Corporation Tax, PAYE, or VAT bill, negotiations with HMRC are necessary. HMRC suggests contacting them through their telephone helpline, but typically, you’ll need to submit your repayment offer and case in writing. Include copies of your limited company’s cash flow position, along with an explanation of why you can’t pay the owed tax and your proposed monthly payment.

When seeking additional time to pay your tax debt, it’s crucial to honestly assess the amount your company can comfortably afford. Overstating this figure is discouraged, as HMRC requires confidence in your ability to maintain the agreed payments. Offering more than realistically affordable may lead to your Time to Pay proposal being refused or rejected.

Asking HMRC for a Time to Pay plan

During the call, HMRC will also evaluate:

• The long-term viability of your company
• The likelihood of a successful Time to Pay plan
• Suitable alternatives in case you fail to adhere to the agreed-upon repayment plan

The interviewer will use this opportunity to inform you about your rights and potential penalties if you fail to comply with the arrangement or provide false information.

While you can handle negotiations with HMRC directly, you might choose to seek the assistance of a professional to represent your case. At Vanguard Insolvency, our licensed insolvency practitioners possess extensive experience in dealing with HMRC and negotiating Time To Pay arrangements for our clients. If you prefer not to manage this process independently, we can communicate with HMRC and advocate on your behalf, leveraging our expertise to enhance your company’s chances of securing this arrangement.

How Much Additional ‘Time to Pay’ Will I Be Given?

Primarily, when considering the potential for a Time to Pay arrangement, HMRC evaluates the ongoing viability of the company in question. They recognise that even well-managed businesses may encounter cash flow challenges occasionally, and thus, they are open to hearing from businesses genuinely facing financial difficulties while making sincere efforts to stay current with their tax affairs.

A Time to Pay arrangement is established for a specific period, and its duration varies depending on the merits of each case. While arrangements exceeding a year are uncommon, they can be attainable based on the circumstances. If your company requires a lengthier instalment plan, other restructuring options may be more suitable. Vanguard Insolvency’s licensed Insolvency Practitioners can assess your company’s financial situation and explore alternative routes if tax debts are impacting your cash flow.

Principles and Guidelines of Time to Pay

Entering into a Time To Pay arrangement does not reduce the total amount of tax owed; rather, it allows for the balance to be settled through a series of more manageable instalments.

Here are key principles and guidelines for an HMRC Time To Pay Arrangement:

• Customers must make a reasonable proposal regarding what they can afford over a specific time period.
• HMRC needs to be satisfied that the customer cannot meet the tax due date without a Time to Pay arrangement.
• Time to Pay is intended for companies facing financial problems, not those seeking to allocate funds elsewhere, such as for expansion or investments.
• Any change in the company’s financial circumstances, whether improvement or deterioration, must be immediately reported to HMRC.
• Instalments are to be over the shortest reasonable time period.
• HMRC’s decision is ‘risk-based,’ and if there’s a higher level of risk, they may request further information before reaching a decision.

The crucial condition is that the company lacks the ability to pay its taxes on time. HMRC will not agree to a Time To Pay arrangement for any other reason. While entering into such an arrangement prevents late payment penalties, interest is charged on the outstanding tax amount.

Can HMRC Cancel a Time to Pay Agreement?

According to the law, HMRC must adhere to the arrangements once agreed, barring exceptional circumstances. If changes in your company’s situation make the agreed time-to-pay arrangement no longer viable, HMRC has the right to withdraw. Honesty is crucial, and if HMRC uncovers any falsification or misinformation during the application process, it reserves the right to terminate the agreement, a step they frequently take.

What happens if I fail to keep up with the Time to Pay?

If you fail to make the agreed payments, HMRC has the authority to terminate the agreement. In the event that your situation deteriorates, they will reevaluate the level of risk. It’s crucial to note that Time to Pay is designed for temporarily distressed companies with the potential for future viability. If you are facing winding-up proceedings or are on the brink of being wound up by a creditor, any existing Time to Pay agreement is likely to be cancelled.

Read More :

• What to do when your company falls behind in paying PAYE
• What are my options when I cannot pay the VAT
• What are the penalties for paying VAT late
• HMRC Bailiffs: What Are Their Rights
• What Happens If Your Limited Company Cannot Pay

What if HMRC rejects or refuses my company a Time to Pay?

There are several reasons why HMRC may reject a Time to Pay proposal. For many companies, it may stem from HMRC doubting the company’s ability to settle the entire balance promptly. Others, with a history of delayed payments to HMRC, may face reluctance from HMRC to consider such an arrangement on principle.

If your Time to Pay application has been rejected, or you anticipate rejection, exploring formal insolvency solutions like administration or liquidation may be necessary to address your company’s financial issues.

For those behind on VAT, PAYE, or corporation tax, Vanguard Insolvency can assess whether pursuing Time to Pay is a viable option. While it may address tax arrears, there could be more suitable alternatives. Contact us for a free initial consultation to prepare for your Time to Pay interview, and we can provide comprehensive support and advice on all aspects of your company’s debt situation.