Updated: 1st March 2021
If you’re struggling to pay business tax debts, it may be possible to negotiate with HMRC for extra time to pay. Their Time to Pay (TTP) arrangement is a valuable facility offering a financial breathing space, and helps to avoid hefty penalties for late or non-payment.
Not all businesses can successfully negotiate extra time to pay, however, and some must find other ways to repay their arrears. So what exactly is a Time to Pay arrangement, and how should you approach negotiations with HMRC?
Time to Pay arrangements are generally offered to businesses with good payment records, and that are proactive when contacting HMRC. You should get in touch as soon as you know you won’t be able to pay, as this demonstrates commitment to solving the problem.
Unfortunately, getting into debt with HMRC is a serious issue as they pursue late payers relentlessly, particularly if they believe the financial problems are not short-term. HMRC have the power to quickly close down insolvent businesses, which makes negotiating for extra time to pay a crucial part of the process.
A Time to Pay arrangement is an instalment plan that repays tax arrears, generally over a period of up to 12 months, but potentially longer. You negotiate with HMRC for an affordable amount whilst continuing to pay your current tax liabilities, so it’s important to establish what exactly is affordable for your business.
This is where professional help is crucial as HMRC focus on the time it takes to repay the debt, and are likely to press for higher monthly repayments so they can recover their money quickly. If you can’t afford to maintain the repayments and the arrangement subsequently fails, HMRC are likely to close down your business using a winding up petition.
When putting together a proposal for more time to pay, you need to be sure the company can meet this new obligation on a monthly basis over the full term of the agreement. You also need to provide supporting evidence to HMRC.
Supporting documentation could include:
If negotiations are unsuccessful and you aren’t offered extra time to pay, there may be other options that would help you out of financial difficulty. Depending on your circumstances, these could include:
Poor cash flow is at the heart of insolvency, so seeking an additional source of finance is a good option. A number of alternative business financing solutions are available that offer flexibility, and aren’t necessarily dependant on good credit ratings.
A Company Voluntary Arrangement is a formal insolvency solution whereby you make a single affordable monthly repayment, which is distributed to creditors according to the agreement. If structured correctly, HMRC may be willing to include their debt in such an arrangement.
For more information on extra time to pay HMRC arrears, call one of our licensed insolvency practitioners. Real Business Rescue is the UK’s leading business recovery practice and can assist you in your dealings with HMRC. We offer free same day consultations With 101 offices stretching from Inverness down to Exeter, Real Business Rescue can offer unparalleled director advice across the UK.
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