If your company owes HMRC and you can't pay in full, a Time to Pay Arrangement (TTP) could help you spread your tax debt. Chris Worden explains how to approach HMRC and improve your chances of approval.
Key Points
- Prepare all VAT, PAYE, and Corporation Tax returns before applying
- Calculate what your business can realistically afford to repay
- Provide an accurate cash flow forecast to HMRC
- Be honest and realistic in your proposal
- Missing future tax payments can cancel your agreement
- Seek professional advice early for the best outcome
What is a HMRC Time to Pay Arrangement?
A Time to Pay Arrangement allows businesses to spread their tax debt over a period, usually up to 12 months. HMRC may approve a plan if you can show your business is viable and you can keep up with repayments. For more on managing HMRC arrears, see HMRC Arrears & Tax Debt.
Why Do HMRC Payment Plans Get Rejected?
- Unfiled tax returns (VAT, PAYE, Corporation Tax)
- Offering more than your business can afford
- Lack of evidence or cash flow forecasts
- Estimated assessments increasing your debt
Directors often make the mistake of negotiating without knowing their numbers. Chris Worden recommends preparing a detailed cash flow forecast before contacting HMRC.
How to Prepare for a Successful Application
- File all outstanding tax returns
- Calculate your business’s affordable monthly payment
- Prepare a realistic cash flow forecast
- Gather evidence to support your proposal
- Be honest about your situation and avoid overpromising
For practical help with cash flow and tax arrears, visit our Info Vault or learn about Company Voluntary Arrangements as an alternative.
Common Mistakes to Avoid
- Not ring-fencing tax money for future payments
- Missing ongoing VAT, PAYE, or Corporation Tax deadlines
- Failing to seek advice early
- Assuming a TTP will solve deeper insolvency issues
When a Time to Pay Arrangement May Not Be Enough
If your business is no longer viable or facing creditor pressure, a TTP may not be the right solution. Explore Liquidation & Company Closure or Company Administration for other options.
Key Takeaways
- HMRC wants evidence and realistic repayment plans
- Unfiled returns or overambitious offers lead to rejection
- Professional advice from experts like Chris Worden can make a difference
- Keep up with ongoing tax obligations during your plan
- Consider all options if your business is struggling
FAQs
- What is a Time to Pay Arrangement with HMRC?
- It's an agreement to spread your tax debt over several months, usually up to 12, if your business can't pay in full.
- What documents do I need for a HMRC payment plan?
- You need all filed tax returns, a cash flow forecast, and evidence of your business’s ability to pay.
- Can I get a payment plan if I have unfiled tax returns?
- No, HMRC will not consider your application until all returns are up to date.
- What happens if I miss a payment under a Time to Pay Arrangement?
- Missing a payment can lead to immediate cancellation of your agreement and further action from HMRC.
- Should I seek professional advice before applying?
- Yes, getting advice from experts like Chris Worden can improve your chances of approval and help you avoid mistakes.
