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Can’t afford to pay Time To Pay arrangement with HMRC

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Updated: 6th January 2020

If you’ve fallen behind with your business tax or National Insurance liabilities, you may have been able to negotiate a Time to Pay (TTP) arrangement with HMRC. These types of instalment plans provide a welcome breathing space to businesses in temporary financial difficulty, and typically offer up to 12 months extra time to pay.

Unfortunately, however, they don’t all reach a successful conclusion. So what happens when you can’t afford the payments to your Time to Pay arrangement, and is there anything you can do to prevent HMRC closing your business down?

Time to Pay arrangements – a vital lifeline

Time to Pay arrangements offer a short reprieve to businesses in arrears with tax or National Insurance, and can allow an organisation to recover financial momentum without the fear of imminent closure by HMRC.

Enforcement action taken by HMRC for non-payment of tax is generally swift, and may ultimately result in a winding up petition followed by closure and liquidation. That’s why it’s so important for business owners and directors to not only secure a TTP, but also to make sure it’s affordable for its whole term.

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What happens when I can’t afford my Time to Pay repayments?

If you fail to meet the TTP repayments, even for a single month, HMRC may decide to cancel the agreement and demand immediate repayment of the amount outstanding. Clearly this will have severe financial repercussions for your business.  

If you aren’t able to pay, and cannot obtain additional finance to ease the situation, HMRC will begin enforcement action against the company. This is likely to include sending bailiffs to recover the debt by seizing business assets under the Taking Control of Goods Regulations.

If debt recovery isn’t possible, HMRC may petition for the company to be wound up, and if a winding up order is granted by the court the business will close down following the liquidation of its assets.

What can I do if I can’t afford to pay my Time to Pay arrangement with HMRC?

It’s crucial to contact HMRC as soon as you know you won’t be able to pay, and also to obtain professional insolvency help. Licensed insolvency practitioners (IPs) understand how HMRC operates and can often communicate with them to great effect on your behalf.

If HMRC aren’t willing to negotiate a new agreement following the failed TTP, however, other avenues remain open that could help you avoid business closure - these potentially include:

Additional finance

Securing alternative funding could introduce the extra cash you need to pay HMRC. One type of alternative finance that may suit your business is a ‘sale and lease back’ arrangement whereby the value of the company’s wholly-owned ‘hard’ assets is released. HMRC might also be encouraged to agree a new TTP arrangement if you’re able to secure additional funding via an invoice finance arrangement that’s based on the value of your sales ledger.

Formal insolvency procedures

A formal insolvency procedure such as a Company Voluntary Arrangement (CVA) might offer you the chance to guide your business out of financial trouble if you’re eligible, or perhaps company administration that offers a moratorium period during which no legal action is permitted.

Real Business Rescue has professional contacts with over 50 alternative lenders around the UK, and can put you in touch with the most appropriate for your circumstances. We are insolvency specialists with extensive experience of dealing with HMRC, and can negotiate with them on your behalf. Please call one of the team to arrange a free same-day consultation – we work from a broad network of offices nationwide.

Jonathan Munnery


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