Negotiating an HMRC time to pay arrangement – advice for directors

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Nick Brierley, at The Insolvency Experts looks at what you should do if you are struggling to pay VAT, PAYE or Corporation Tax. If your business is in financial distress, paying taxes is often one of the first things you fall behind on. HMRC is the most common business creditor and almost all insolvent companies will owe them some form of debt.

Paying taxes late can imply to HMRC that your company is either insolvent or approaching insolvency and the electronic system which HMRC has in place means they are well placed to quickly identify late payers. Depending on the circumstances, it can be possible for a business to negotiate additional time to pay what is owed through what is known as a ‘Time to Pay Arrangement’ (TTP) with HMRC.

If you do need more time to pay your tax bill, a TTP instalment plan may be a viable solution for your company and the team at The Insolvency Expert can offer support to business owners and directors who are considering this option. However, before rushing into this as a way to bring your tax arrears up to date, it is useful to know what the process entails and the likelihood of you being accepted by HMRC.

A TTP arrangement allows for your HMRC debt to be paid back in instalments, typically over a period of up to 12 months although occasionally when a TTP is agreed it is for a longer period, but these are extremely rare. It is important to understand that HMRC are under no obligation to agree and period of time to pay so it should only be applied for in the most urgent circumstances. If you foresee that you will be unable to meet your tax obligations you should contact HMRC as the earliest opportunity or better still contact The Insolvency Expert. We can analyse your cash flow and help you put forward a realistic proposal to HMRC to help alleviate your business’s financial distress. If you have a poor compliance history with HMRC it is arguably more important that you seek specialist advice as you are more likely to have a TTP arrangement refused if you have not conducted your tax affairs well historically.

HMRC states on their website that they prefer to be contacted via their telephone helpline, but in most instances you will need to produce your repayment offer and case in writing, along with copies of a cash flow forecast. You will need to explain why you are unable to pay, and how much you are able to offer as a monthly instalment. It is important to be honest and realistic with both yourself and HMRC about the amount your business can afford and not to overstate the amount. HMRC won’t agree to a TTP arrangement unless they are confident that your business will be able to manage the payments and offering to pay more than you can realistically afford could lead to your proposal being rejected. HMRC will also assess the long-term viability of your company, the probability of a TTP arrangement being successful and appropriate alternatives if you don’t manage keep to the plan. You will be advised of your rights and what the penalties will be if you don’t keep to the arrangement or falsify information in any way.

The team at The Insolvency Experts have experience of dealing with HMRC and negotiating TTP arrangements and if you would prefer not to handle this process yourself we can negotiate with HMRC on your behalf, using our expert knowledge to help you get the appropriate arrangement in place. We can advise you on whether or not a TTP arrangement is an option worth pursuing. This may be a viable solution to your tax arrears, but there may be other more suitable alternatives which we can explore. We can offer comprehensive support and advice on all matters concerning your company’s financial distress.

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Nick Brierley can be contacted on 0300 303 8284 or via our enquiry form.