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HMRC Time to Pay Arrangements

Licensed UK Insolvency Practitioners FREE Meeting for Company Directors We can help with serious company debts, HMRC and creditor pressure, VAT/PAYE/Tax arrears, cashflow problems and raising finance.

HMRC Time to Pay Arrangements and Support for Directors

What can I do if I am falling behind on paying corporation taxes, PAYE or VAT? Will HMRC give me time to pay?

When a company is experiencing problems with cashflow, even if it is not yet technically insolvent, it may be difficult to keep up with taxes. Unfortunately, paying taxes late can send up a red flag to HMRC that your company is potentially insolvent and this is where your worries can begin in earnest. It is not a good idea to keep the taxman waiting because the new system in place is quick to spot late payers.

The Time to Pay installment plan might be a viable solution for your company and Real Business Rescue can offer support to business owners and directors. Before choosing this option to bring tax arrears up to date, it helps to have a little knowledge on what you can gain and what pitfalls you may encounter.

Keith Tully - Managing Director

Keith Tully

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At anytime you can speak to one of our many clients to gain first hand experience of how we helped and supported them through the financial difficulties they encountered. 
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Honesty Is the Best Policy

It may seem like an amazing gift to be able to catch up with tax arrears in monthly instalments, but one thing to be aware of is that you can’t fool the taxman. One way or another, the truth will come out and if you have misled HMRC. It is bad enough owing tax without also having a stiff penalty imposed on top. Real Business Rescue Insolvency Practitioners will advise you right up front that honesty is the best policy but doubly so when it comes to the taxman.

Contacting HMRC

HMRC states on their website that they prefer to be contacted via telephone but they will make exceptions for certain disabilities like the hearing impaired. This is where they will try to discern whether you are unable to pay or simply unwilling to pay. Not only will they seek to make this determination but HMRC will also assess:

  • The viability of your company
  • The probability of a Time to Pay plan being successful
  • Appropriate alternatives if you don’t keep to the plan

It is their belief that telephone contact is the most efficient which will enable them to make a decision much quicker. The interviewer will use this opportunity to advise you of your rights and what the penalties may be if you don’t keep to the arrangement or falsify information in any way.

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

First and foremost, HMRC will look for the viability of a company. They realise that many businesses are experiencing cashflow problems, especially during the current recession, and companies have the statutory right to request instalment repayments. Usually the Time to Pay (TTP) arrangement is set for a period of three to six months, but these instalments are discretionary and exceptions to the rule can be made. If the TTP is expected to take more than a year, it can be allowed but only in certain exceptional cases. Each case is reviewed individually so timeframes will vary from company to company. If your company needs a longer instalment plan, other recovery options may be more suited to your needs.

Principles and Guidelines of Time to Pay

Many businesses are surprised to learn that HMRC will not reduce the total amount of taxes due when a TTP arrangement is made. Although each case is decided on its own merits, no one is ever given a break. Here are a few of the key principles and guidelines of TTP:

  • Customers MUST make a reasonable proposal in terms of what they can afford over a specific time period

  • HMRC needs to be satisfied that you (the customer) will not have the ability to meet the tax due date

  • TTP is to provide extra time for those companies experiencing financial problems, not for those wishing to use the money elsewhere (i.e. expansion or investments)

  • If the company’s financial circumstances change in any way, for the better or worse, you must notify HMRC immediately

  • The instalments are to be over the shortest time period reasonably possible

  • HMRC’s decision is ‘risk based’ so if there is a greater amount of risk, they may require further information before reaching a decision

Keep in mind that the most important stipulation is that your company lacks the ability to pay its taxes on time. HMRC will not agree to a TTP arrangement for any other reason.

Can HMRC Break the Agreement?

According to law, HMRC must keep to the arrangements except under very strict criteria. If there are any changes in your company’s circumstances which wouldn’t be supportive of the TTP plan, they have the right to withdraw. As mentioned above, honesty is imperative and if they discover that you have falsified or misled them in any way during the application process, they can vacate the agreement as well. If you default they can break the agreement and of course, if your situation worsens they will reassess the amount of risk. Remember, Time to Pay is for temporarily distressed companies that have the capability of future viability. If you should be wound up by a creditor or on the verge of becoming wound up, they may very well cancel their agreement.

If you are delinquent on VAT, PAYE or even on your corporation taxes, Real Business Rescue can advise you on whether or not Time to Pay is a good option for your company. This may be a viable solution to your tax arrears, but there may be other more suitable alternatives to explore. Contact us for a free initial consultation so that we can help you prepare for your interview with Time to Pay. Better yet, we can offer comprehensive support and advice on all matters concerning your companies financial distress. 


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