Business Rescue

Time to Pay & HRMC Debt

Falling behind on payments to HMRC can easily occur, often a result of bad debt or unexpected expenditure having an immediate negative effect on business cash flow. In order to continue trading, essential payments such as suppliers, wages, rent and utilities are often prioritised above payments to HMRC. If not repaid quickly, this situation can easily spiral out of control and become unmanageable.

What is a Time to Pay Arrangement?

The Time to Pay arrangement is a government initiative implemented in 2008. It was initially an attempt to combat the effects of the recession. It works by allowing struggling businesses to repay their outstanding corporation tax, PAYE/ NI or VAT liabilities in instalments, rather than in one go. Usually, Time to Pay arrangements last either 6 or 12 months. However, they may last longer if there is a realistic prospect the debt will be repaid eventually.

What are the advantages of a Time to Pay Arrangement?

HMRC liabilities will not simply disappear overnight but seeking a Time to Pay arrangement has its advantages.

  • You will be spreading out the repayment of your debt over a period of time, rather than all at once. This will improve cash flow and ensure your business has money to pay other outgoings such as rent, wages and suppliers.
  • Opting for a Time to Pay arrangement will demonstrate a willingness to repay liabilities. This helps your business remain on good terms with HMRC.
  • Proactively seeking Time to Pay will decrease the likelihood of HMRC taking enforcement action against your business.

Is a Time to Pay arrangement right for me?

A Time to Pay arrangement is ideal for any type of business – a sole trader, partnership or limited company. It is useful for businesses where tax arrears have accrued during a cash flow shortage. This may be as a result of a bad debt or an unexpected expenditure. As a consequence of this cash shortage, NI contributions/ VAT or PAYE arrears may have accrued with HMRC. However, if the business has reasonable prospects of returning to financial stability, HMRC will usually accept a Time to Pay proposal. It will also assist with the proposal if the submitting of tax returns have been on time and paperwork is up to date.

How we can help

If you are looking to negotiate a Time to Pay Arrangement with HMRC, or are concerned about your current arrangement, we have the experience and expertise to help you through the process. We have developed strong relationships with HMRC, to put us in a great position to negotiate. If HMRC refuses to accept to terms of the TTP, we can still give advice on alternative solutions which could help salvage your business.

Contact an expert for professional help and advice

Our team member below will be able to help with all your questions

Patrick Wadsted

Licensed Insolvency Practitioner

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