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 HMRC Time to Pay arrangement helps; basically paying HMRC instalments.
HMRC are within their rights to pursue debts and have the power to enforce the sale of assets (not a home) to finance the liability or, at the extreme, make a taxpayer bankrupt as well as taking funds from personal bank accounts in some circumstances. With a HMRC Time to Pay arrangement this can be avoided, particularly since the 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 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. The same applies to a corporate business facing being wound-up. An HMRC Time to Pay plan is available to all types of taxpayers and businesses with liabilities.
Before considering a HMRC time to pay arrangement, they would expect to review the taxpayer’s financial position carefully to ensure that the client will be able to fund any agreement 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 time to pay plan, and makes the process of agreeing HMRC instalments run a lot smoother.
There is a relatively short period of time at the end of an enquiry or investigation when agreeing an HMRC 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. It is always better to speak to a specialist as soon as possible so formal proceedings and/or 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 HMRC Time to Pay arrangement.
HOW CAN PURE TAX HELP?
Time to Pay (HMRC TTP)
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 installments 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.
