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Coronavirus Advice  •  HMRC

What to expect from ‘Time to Pay’

By RJP LLP on 17 July 2020

Time to Pay is an arrangement operated by HRMC to allow taxpayers who cannot pay their tax liabilities to negotiate a personal payment arrangement that suits their financial circumstances.

As you might expect, this is in great demand currently because increasing numbers of people are experiencing difficulties. HMRC usually has around 600,000 Time to Pay arrangements in place for around £2bn of debt; since March when the Covid lockdown began, 60,000 businesses have contacted HMRC to negotiate a Time to Pay (TTP) Arrangement.

When considering TTP, it is important to appreciate that this is a facility for businesses that are viable and are experiencing temporary difficulties. It is not a way to avoid having to pay your tax bill; if business performance is expected to continue to be weak, it may not be the solution because HMRC will be expecting you to pay the full amount of tax owed in a series of pre-agreed instalments. The arrangement can cover any amount owed to HMRC – there is no standard length of time to pay or amount of liability for which it is appropriate; each is specific to the individual circumstances and is negotiated on a case by case basis. In addition, eligibility is simply based on your individual ability to pay, rather than a preference for specific industry sectors.

If you know you will be unable to pay your tax bill, you should contact HMRC as soon as possible, calling their Payment Support Service on 0300 200 3835. If you are a Self-Assessment taxpayer, it may be possible to apply online through a self-service portal. In the majority of cases however, the negotiations will take place over the phone.

The discussions can be lengthy, and you should be well prepared, with all the relevant information to hand and plenty of time available. If you wish your accountant to be present, they can attend the call too, but HMRC will expect to be dealing with you, the business owner, directly. They will want to establish your financial position directly with you and whether TTP is the best payment solution.

Securing Time to Pay: How to proceed

Before you contact HMRC, you will need to have to hand:

  • Details of your income and disposable assets (these may be used to recover the debt);
  • Details of your expenditure and any forthcoming expenditure that will impact your cashflow;
  • Your tax reference number and details of the tax bill you wish to delay payment for;
  • Details of any previous outstanding liabilities due to HMRC and your likely future liabilities;
  • A proposal to present HMRC of how you will pay the debt off in regular instalments and over which timeframe;
  • Your bank details – a direct debit arrangement will be set up during the call.

Once HMRC has agreed that you can enter into a TTP Arrangement, they will consider the timeframe and how much needs to be paid in each instalment. If the sum owed is relatively small and can be paid off quickly, this will be straightforward. If the situation is more complex, it might require more time to agree.

The repayment amounts agreed will take into consideration current outstanding liabilities and also future payments – to ensure that you can meet the agreed obligations.

Expect the TTP payments to begin immediately, with all payments being identical, to be made on pre-agreed dates.  Interest will be payable on the amounts owed and this will accrue until the final payment is made.

If your financial circumstances improve, it may be possible to repay the debt more quickly and then pay less interest. If the reverse happens, you may be able to renegotiate the terms, provided you contact HMRC before any default and you have a valid justification.

It is important to meet all the payments you have negotiated with a TTP Arrangement. If you miss any payments or you cancel the direct debit, HMRC has the right to pursue enforcement measures. This could be through court action, recovery through selling assets, or even forced insolvency proceedings. These are very much a last resort, but it is important to  appreciate that if you enter into a TTP Arrangement, HMRC will expect all payments to be made on time and in full.

Many businesses are facing difficult circumstances right now and if you require help with paying your taxes through a TTP arrangement, please contact us to discuss or contact HMRC’s Payment Support Service on 0300 200 3835.


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