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Is it possible to negotiate Time to Pay with HMRC?

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Is it possible to negotiate Time to Pay with HMRC?

A Time to Pay arrangement is a valuable debt solution that is sometimes offered by HMRC to businesses experiencing temporary cash flow problems. Covering arrears of corporation tax, VAT, and PAYE, a Time to Pay arrangement, or TTP, offers businesses the opportunity to recover financial stability whilst retaining a good relationship with HMRC.

To stand the best chance of success, HMRC should be contacted as soon as it’s known that a payment will be late. Doing so can pave the way for extra time to pay the arrears, and avoid the hefty penalties imposed for late and non-payment.

Negotiating a TTP arrangement

Having professional help to negotiate with HMRC can be extremely beneficial for clients:

  • It allows them to present accurate and reliable figures in their proposal
  • Qualified accountants typically have prior experience of dealing with HMRC, and understand what they are looking for in this situation
  • It offers peace of mind when clients are facing mounting debt

Negotiating with HMRC can also be a daunting prospect for business owners. With a little preparation and expert assistance to establish an affordable repayment amount, however, this type of instalment plan can work well for businesses.

Presenting a proposal to HMRC for extra time to pay

When presenting a case for extra time to pay, HMRC will want to know why your client has been unable to meet their obligations. The reasons given will need to be backed up by hard evidence, and sales forecasts and cash flow predictions included that could persuade HMRC to sanction a TTP.

HMRC will also want to know:

  • How the arrears will be paid back - perhaps via a cost-cutting exercise, for example
  • The monthly repayment amount being proposed
  • The timescale involved

It’s crucial to only agree a repayment amount that’s affordable for the business for the full duration of the arrangement, however, even if HMRC try to pressurise you or your client for more.   

If a single TTP payment is missed the arrangement is likely to fail, and HMRC could decide to take legal action against the business via a winding up petition, quickly resulting in its closure.

Considerations for a Time to Pay arrangement

  • HMRC will want the arrears to be repaid as soon as possible, but the amount they put forward might not be affordable for the company
  • Time to Pay arrangements are only for arrears - your client must continue to pay their current tax liabilities on time
  • HMRC are more likely to agree to extra time to pay if the company has a good history of repayment and filing
  • Being proactive as a company, and keeping open communications with HMRC, is crucial
  • Time to Pay arrangements are typically for 6-12 months, but it may be possible to negotiate a longer instalment plan in some cases
  • It’s unlikely a TTP will be offered if the directors’ loan accounts are overdrawn
  • If the arrangement fails, the company is exposed to the risk of compulsory liquidation, as HMRC are likely to issue a winding up petition. This is why it’s vital to agree on a repayment amount the company can afford

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David Tattersall
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