Time to Pay Arrangements
Time to Pay Arrangements
HMRC’s Time to Pay (TTP) arrangements allow taxpayers to spread their tax liabilities over an agreed period. Understanding the criteria and the process is essential for a successful application.
HMRC’s Criteria
- Companies: HMRC generally expect companies to settle their liabilities within 12 to 18 months.
- Individuals: HMRC may allow individuals 12 to 24 months to clear their debts.
- All subsequent liabilities must be paid promptly and on time throughout the arrangement.
Missed Payments
A single missed payment can usually be remedied without the arrangement being cancelled, provided the taxpayer acts quickly and communicates with HMRC. However, repeat defaults will lead to the arrangement being withdrawn.
Repeat Arrangements
Where a taxpayer has previously had a Time to Pay arrangement, HMRC will require financial documentation to support any new application. This may include management accounts, cash flow forecasts, bank statements, and evidence of the taxpayer’s ability to meet the proposed payment schedule.
Debt Recovery Officers
Be aware that HMRC’s debt recovery officers can pursue aggressive tactics. They may press for immediate payment in full, threaten enforcement action, or suggest that a Time to Pay arrangement is not available. Professional representation can help ensure that the taxpayer’s rights are protected and that a reasonable arrangement is agreed.
VAT-Specific Advice
For VAT liabilities, it is critical that you do not allow yourself to be pressured into paying arrears at the expense of ongoing liabilities. This is because Default Surcharge penalties escalate and can reach 15% of the VAT due for each period where a default occurs.
The best approach is to maintain current payments while managing the arrears. If you are in VAT arrears, prioritise keeping your current returns up to date and paid on time, and negotiate a separate arrangement for the outstanding balance.
Get Help
If you need assistance negotiating a Time to Pay arrangement with HMRC, contact us for professional advice tailored to your circumstances.
Frequently asked questions
How long will HMRC give me to pay under Time to Pay?
HMRC generally expect companies to settle their liabilities within 12 to 18 months, while individuals may be allowed 12 to 24 months to clear their debts. Throughout the arrangement, all subsequent liabilities must be paid promptly and on time.
What happens if I miss a Time to Pay payment?
A single missed payment can usually be remedied without the arrangement being cancelled, provided the taxpayer acts quickly and communicates with HMRC. However, repeat defaults will lead to HMRC withdrawing the Time to Pay arrangement, so any missed payment should be addressed promptly.
Can I get a second Time to Pay arrangement with HMRC?
Where a taxpayer has previously had a Time to Pay arrangement, HMRC will require financial documentation to support a new application. This may include management accounts, cash flow forecasts, bank statements and evidence of the taxpayer's ability to meet the proposed payment schedule.
Should I pay off VAT arrears before my current VAT returns?
No. It is critical not to be pressured into paying VAT arrears at the expense of ongoing liabilities, because Default Surcharge penalties escalate and can reach 15% of the VAT due for each period where a default occurs. The better approach is to keep current returns paid on time and negotiate a separate arrangement for the arrears.
