What is a HMRC Time To Pay Arrangement?

What is a TTP Tax Payment Plan?

A TTP Tax Payment Plan is a structured plan that allows businesses to clear their tax debts in instalments over a period, rather than a single lump sum. This plan includes all forms of taxes such as corporation tax, VAT, and PAYE. The key is to ensure the plan is affordable and does not further jeopardise the company’s financial position.

Can HMRC Cancel a Time to Pay Agreement?

Yes, HMRC retains the right to cancel a TTP agreement under certain conditions. Key triggers for cancellation include missed payments, failure to comply with current tax obligations, or significant changes in your financial situation that were not disclosed during negotiations.

To avoid this, engage in regular communication with HMRC, especially if there are any changes in your business that might affect your ability to meet the TTP terms. Promptly addressing potential issues and proposing adjustments can help maintain the agreement.

Negotiating More Time-to-Pay Company Tax Debts with HMRC

Negotiating a Time-to-Pay (TTP) arrangement is more than just a financial transaction; it’s a strategic dialogue with HMRC.

When entering negotiations, transparency and honesty about your company’s financial health are paramount. Prepare detailed financial statements, cash flow forecasts, and a realistic repayment plan. HMRC will evaluate your company’s past tax compliance, current financial condition, and the specific challenges preventing timely tax payment.

This process may include discussing any unforeseen circumstances, such as market downturns or internal business disruptions, that have impacted your ability to pay. It’s also important to demonstrate a commitment to future tax compliance and show how the TTP arrangement will support the long-term viability of your business.

What if HMRC Rejects or Refuses My Company a Time to Pay?

If HMRC declines your TTP proposal, it’s essential to understand their rationale. Common reasons for rejection include a lack of credible financial information, doubts about your company’s viability, or previous non-compliance with tax obligations. In such cases, reevaluating your proposal with the help of an insolvency practitioner could be beneficial.

They can provide insights into HMRC’s decision-making process and help you prepare a more compelling case, perhaps by offering additional financial information, restructuring the proposed payment schedule, or demonstrating more robust financial controls. Remember, a revised proposal should address HMRC’s concerns while still being feasible for your business.

How Much Additional ‘Time to Pay’ Will I Be Given?

The length of a TTP arrangement is tailored to each company’s situation. While HMRC typically considers agreements up to 12 months, they may extend this period based on the specifics of your case. For instance, if your business has a solid track record and a clear plan for future profitability, HMRC might be more inclined to offer a longer repayment period.

It’s essential to propose a timeframe that aligns with your company’s projected cash flows and earning potential, ensuring that you can meet the obligations without jeopardizing your business’s operations.

What Happens if I Fail to Keep Up with the Time to Pay?

Failing to adhere to a TTP schedule is taken seriously by HMRC. If payments are missed or delayed without prior agreement, HMRC may move to terminate the arrangement. This action can initiate a more aggressive debt recovery process, potentially leading to legal proceedings or enforcement actions.

Such outcomes could significantly harm your business’s credit rating and might even result in insolvency proceedings. Therefore, maintaining the agreed payment schedule is crucial for the financial health and reputation of your company.