Struggling with HMRC tax arrears? Setting up a Time to Pay (TTP) arrangement can help you avoid enforcement action and keep your business trading. Chris Worden from Director First explains how to approach HMRC and secure a realistic payment plan.
- Contact HMRC before they contact you
- Know your exact tax arrears and cash flow
- Prepare a clear proposal and be honest
- Negotiate realistic terms—don’t overpromise
- Get written confirmation and stick to the plan
- Missing payments can trigger enforcement or winding up
What is a Time to Pay Arrangement?
A Time to Pay (TTP) arrangement is an official agreement with HMRC allowing you to repay tax debts in instalments, usually over 3 months to 3 years. It covers VAT, PAYE, NIC, corporation tax, income tax, penalties, and interest.
Why Act Early?
HMRC can take money directly from your bank, seize assets, or petition to wind up your company if you ignore them. Directors who engage early get more flexibility. Chris Worden stresses the importance of being proactive to avoid enforcement.
Benefits of a TTP Arrangement
- Stops immediate enforcement action
- Protects your cash flow
- Lets you keep trading
- Keeps your company’s situation private
- Shows you’re acting responsibly
Step-by-Step: How to Set Up a TTP Arrangement
- Get your numbers straight: Know exactly what you owe (VAT, PAYE, corporation tax) and ensure all returns are up to date. Prepare a 13-week cash flow forecast.
- Contact HMRC before they chase you: Use the correct phone line or online portal for small debts. Early contact can help you avoid penalties and enforcement.
- Explain your situation clearly: Be honest about why you can’t pay, what’s changed, and what you can afford. Share your cash flow forecast and management accounts if possible.
- Negotiate realistic terms: Aim for the longest period possible, but don’t overpromise. Know your limits and be prepared to offer a lump sum if asked.
- Get written confirmation: Wait for HMRC’s written agreement before assuming enforcement is paused.
- Stick to the plan: Missing a payment will cancel the arrangement and restart enforcement.
Common Mistakes to Avoid
- Waiting for HMRC to contact you
- Overpromising on payments
- Failing to keep returns up to date
- Missing payments on current tax bills
Key Takeaways
- Be proactive—contact HMRC early
- Prepare accurate numbers and forecasts
- Negotiate terms you can stick to
- Get everything in writing
- Stick to your payment plan to avoid enforcement
FAQs
- What taxes can be included in a Time to Pay arrangement?
- VAT, PAYE, NIC, corporation tax, income tax, penalties, and interest can all be included.
- How long can a Time to Pay arrangement last?
- Typically from 3 months up to 3 years, sometimes longer if justified.
- What happens if I miss a payment?
- HMRC will cancel the arrangement and may start enforcement action immediately.
- Will a TTP arrangement affect my company’s reputation?
- No, TTP arrangements are private and not advertised.
- Should I get professional help to set up a TTP?
- For large debts or complex cases, professional advice from experts like Chris Worden is recommended.
Need help with HMRC or setting up a Time to Pay arrangement? Contact us today for expert, confidential advice.
