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