What to do if you owe HMRC money


If you owe money to HMRC, it's important to pay what you owe as quickly as possible. This can help you avoid late payment penalties and improve your chances of getting a good result from an offer in compromise (otherwise known as an "OIC"). If you're experiencing financial difficulties, the best way to get out of debt is by working with HMRC on a Time to Pay arrangement: it allows you to pay off your tax debt in instalments over time.

What is a Time to Pay arrangement?

A Time to Pay Arrangement (TTA) is a way for you to pay off your tax debt. You can either make regular payments or pay off the whole amount in one go. If you choose to make monthly payments, HMRC will contact you with details of how much money they expect from each payment and when it should be paid by.

If there's no other way for you to pay off your debt (for example if there isn't enough money left over after paying essential bills), then making an instalment arrangement may be better than having no arrangement at all. With this type of arrangement though, interest still builds up on any outstanding balance so it's important that those who use them know how much their debt will cost them in total before deciding whether or not this option is right for them

I've already made an agreement with HMRC. What happens now?

You will be sent a letter confirming the agreement, which includes:

● Your payment schedule, including how much you have to pay and when.

● The interest rate that applies to your debt. This can be changed by HMRC at any time without notice, but will not change during the term of your Time to Pay arrangement.

If you fail to make any payments under your Time to Pay arrangement, or if there are other problems with making them (for example, if HMRC doesn't receive them on time), then HMRC may take action against you in order to recover all or part of its money from you. This may include charging interest and penalties on top of any outstanding unpaid tax debts; increasing any future payments due under an earlier instalment plan; issuing court proceedings against those who refuse or neglect their obligations under an earlier instalment plan; or taking other legal actions such as placing restrictions on bank accounts held by individuals who owe large sums of money directly into government coffers before they can access funds needed for everyday living expenses such as food shopping etc.

I've paid the debt, but now I've received a new letter from HMRC. Why?

If you've paid the debt, but now find that you've received a new letter from HMRC. Why?

The most likely reason for this is because:

● You may have paid an amount different to the one originally agreed. For example, if you were given 12 months to pay and then decided to pay early or in instalments throughout those 12 months (which is allowed).

● You may have paid too much - HMRC will automatically refund any excess within 30 days of receiving your payment. If they don't do so within 30 days then get in touch with them straight away and ask them why not.

How can I pay off my debt faster?

Pay off your debt faster by making extra payments. If you can afford to, try to make a lump sum payment or set up a direct debit to pay off part of it each month. This will help reduce the interest and charges that have been added onto your original debt, meaning that HMRC will get their money back sooner.

Pay by credit card. This option is only available if there are no other charges associated with the card (such as annual fees), but it allows you to spread out payments over time - paying just 1% per month on average compared with 7% interest charged by banks for personal loans and overdrafts.

You can make your tax payments early and avoid late payment penalties by arranging a time to pay agreement with HMRC.

If you have a tax debt and would like to pay it off early, a time to pay arrangement can help. This means that HMRC will agree with you how much and when they need to be paid each month.

If the payments are not made on time or if the agreed amount increases, HMRC may charge late payment penalties which will increase the total amount due.

Hopefully, you now have a better understanding of how Time to Pay arrangements work. If you have any questions about your own situation or whether this is the right option for you, please contact us at enquiries@frostbr.co.uk and we'll be happy to help!

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