Who Can Apply for a Time to Pay Agreement?
If you have reached the end of a dispute with HMRC and the taxes, interest and penalties have been agreed, then you may find that you do not have the funds available to settle the amount in one go. Also, there could be another established debt, e.g. self-assessed amount due for repayment. That’s where a Time to Pay arrangement helps; basically paying HMRC instalments.
What Is an HMRC Time to Pay Arrangement?
So, if you cannot pay your tax bill in full, you may be able to set up a HMRC instalments payment plan to pay it. HMRC will check if a payment plan is affordable for you and whether repayment terms offered are too low. If you cannot agree a payment plan with them, they’ll ask you to pay the amount you owe in full and consider formal proceedings.
HMRC are within their rights to pursue debts and have the power to:
(1) enforce the sale of assets (not a home) to finance the liability or, at the extreme,
(2) make a taxpayer bankrupt or issue a company with a winding up petition, as well as
(3) taking funds from personal bank accounts in some circumstances.
With a Time to Pay arrangement this can be avoided, particularly since the potential new/ongoing penalties can be painful and reputational damage following a bankruptcy can be significant too.
HMRC would always rather facilitate the continued operation of a business (if only so that they continue to receive annual revenues!) so are genuinely open to discussing payment options – HMRC instalments – if it is possible for the taxpayer to settle their liabilities over a set period of time, rather than pursuing a bankruptcy or winding up action. An HMRC Time to Pay plan is available to all types of taxpayers and businesses with liabilities.
“If you get a pension, HMRC will count that as ‘income’, but will not count the amount in your pension pot as savings.
How We Negotiate HMRC Time to Pay Arrangements
What Information Does HMRC Require?
You’ll need to tell HMRC:
- if you can pay in full (a lump sum)
- how much you can repay each month, realistically
- if there are other taxes you need to pay – it is best to include these in any plan
- how much money you earn – incomings must be forecasted
- how much you usually spend each month – outgoings must be forecasted
- what savings or investments you have
If you have savings or assets, HMRC will expect you to first use these to reduce your debt as much as possible. If you’ve received independent debt advice, for example from Citizens Advice, you may have a ‘Standard Financial Statement’. HMRC will accept this as evidence of what you earn and spend each month.
Why Choose Pure Tax for HMRC Time to Pay Negotiations?
Certainly, before considering any arrangement, they would expect to review the person’s financial position carefully to ensure that the client will be able to fund any HMRC instalments plan reached. They would also expect the taxpayer to use every possible way to meet their obligations and pay the taxes, interest and any penalties that are due in one lump sum, plus for example, taking loans and realising assets.
These financial checks can be detailed and intrusive sometimes. Getting an industry-recognised specialist involved will mitigate many of HMRC’s concerns about the robustness of an HMRC TTP plan, and makes the process of agreeing HMRC instalments run a lot smoother.
Speak to an HMRC Time to Pay Expert Today
Please be mindful that there is only a short period of time at the end of an enquiry or investigation when agreeing an time to pay arrangement with the Inspector is possible. Once a debt has been passed to HMRC’s “Debt Management” unit, it can be harder to negotiate a payment plan. So it is better to speak to a specialist as soon as possible so formal proceedings and/or HMRC debt collection aggression are avoided.
If you, or your client, have been contacted by Debt Management directly then do get in touch as there are still HMRC instalments options. We are used to dealing with Debt Management and, put simply, we know what they will and will not accept as part of a formal, negotiated financial plan / arrangement.
HOW CAN PURE TAX HELP? HMRC Time to Pay Arrangement Specialists
Why Choose Pure Tax for HMRC Time to Pay Negotiations?
At Pure Tax Investigations our HMRC specialists are industry recognised and have dealt with hundreds of contentious situations with HMRC over the years. We are adept at managing interactions with the tax authorities to ensure that the investigation and disclosure processes run smoothly and that your interests are best protected.
Please see HMRC’s published guidance about these instalments plans here. But remember, the best payment solution looks different for each individual and business so a tailored approach is important. We collect the relevant information to assess and demonstrate the income and expenditure first, and consider one’s specific financial circumstances to arrive at a specific plan which could be agreed by HMRC. Again, there is no ‘standard’ HMRC Time to Pay arrangement.
A HMRC TTP arrangement can cover all outstanding tax amounts overdue, including penalties and interest thereon. The arrangements are designed to be as flexible as possible and so are not fixed in a formal contract’s sense. They can even be amended over time, so they can be shortened if one’s income rises or if there is a cash windfall for example. In some circumstances, they can also be lengthened if one’s essential expenses increase.
Over 90% of HMRC Time to Pay arrangements are completed successfully.
