hmrc business payment plan

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Money and tax
Dealing with HMRC

If you cannot pay your tax bill on time

Setting up a payment plan.

To set up a payment plan you’ll need:

the relevant reference number for the tax you cannot pay, such as your unique tax reference number
your UK bank account details - you must be authorised to set up a Direct Debit
details of any previous payments you’ve missed

You may be able to set up a payment plan online, depending on which type of tax you owe and how much you owe.

If you owe tax from Self Assessment

You can set up a Self Assessment payment plan online if you:

have filed your latest tax return
owe £30,000 or less
are within 60 days of the payment deadline

do not have any other payment plans or debts with HMRC

HMRC will ask you about your income and spending when you set up your plan.

If you owe employers’ PAYE contributions

You can set up an employers’ PAYE payment plan online if you:

have missed the deadline to pay an employer PAYE bill

owe £50,000 or less

plan to pay your debt off within the next 12 months

have debts that are 5 years old or less
have sent any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due

If you owe tax from VAT

You can set up a VAT payment plan online if you:

have missed the deadline to pay a VAT bill

have a debt for an accounting period that started in 2023 or later

have filed all your tax returns

You cannot set up a VAT payment plan online if you’re in the Cash Accounting Scheme, Annual Accounting Scheme, or you make payments on account.

If you cannot set up a payment plan online

You’ll need to contact HMRC .

They will ask you:

if you can pay in full
how much you can repay each month
if there are other taxes you need to pay
how much money you earn
how much you usually spend each month
what savings or investments you have

If you have savings or assets, HMRC will expect you to 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.

If your company is in tax debt

HMRC will ask you to propose how you’ll pay your tax bill as quickly as you can. They will ask questions about your proposal to make sure it is realistic and affordable for you.

You must reduce your debt as much as possible before setting up a payment plan. You can do this by releasing assets like stock, vehicles and shares.

HMRC may ask company directors to:

put personal funds into the business
accept lending
extend credit

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How an HMRC Time to Pay Arrangement Can Save Your Business

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When tax bills become insurmountable, an HMRC Time to Pay arrangement is one of the most effective ways to ensure that your business can pay its tax debts. By splitting any tax debt into manageable payment instalments, companies are able to navigate large bills that would otherwise cripple the business.

Table of Contents

Why doesn’t everybody use an HMRC Time to Pay arrangement?

They’re only available to those that are already in debt, and even then, HMRC aren’t keen on issuing them. After all, if you’ve struggled to pay your taxes this financial year, why wouldn’t you struggle when you have to pay it back alongside next year’s taxes too?

Of course, it may be that you experienced a tricky situation that made it particularly difficult last year, or that you expect your business to be stronger next year. Unfortunately, HMRC don’t always see things like that, and would rather some businesses fold than potentially accrue more debt by staying open.

That’s where a specialist service such as those offered by our HMRC Time to Pay Arrangement Negotiation Team can really help. We’ve managed to secure manageable payment plans for countless UK businesses, and enjoy strong relationships with HMRC.

But how exactly does an HMRC Time to Pay arrangement help struggling companies?

Tax bill bigger than you thought?

Our Time to Pay negotiation team can help you to chop it up into manageable payments. We work alongside HMRC every single day, and know exactly what they look for when deciding whether to grant Time to Pay agreements.

Call our team for free, no-obligation advice today on 0800 975 0380 or book a free consultation

Benefits of an HMRC Time to Pay Arrangement

Flexible and manageable payments.

This is undoubtedly the main and most obvious benefit to an HMRC Time to Pay arrangement. Tax bills can catch many businesses unprepared, and the need to pay a large amount in one payment can blow a sizeable hole in a company’s cash reserves.

Turning that large debt into affordable monthly payments makes it a lot easier to pay off. Be careful though, HMRC is less likely to agree to a Time to Pay arrangement if you’ve already had to use one before.

Stop accruing debts

If a business is finding it difficult to pay their taxes, then carrying on without taking any action will only increase its amount of HMRC debt. Securing an HMRC Time to Pay arrangement allows companies to tackle debts right away and avoid late payment penalties.

Late payment penalties differ based on whether it is Corporation Tax or VAT that the business is behind on. There are also higher charges for those that repeatedly pay their taxes late.

Overdue VAT payments start from 2% interest on any amount owing after 15 days, to a daily 4% rate being charged to those who have already filed a late payment after 31 days.

Overdue Corporation Tax, meanwhile, charges a straight £100 after just one day late, with another £100 added after three months, 10% interest added after six months, and an additional 10% added after 12 months.

Avoids legal complications

As they’re understandably weary of companies building up more and more debt with them, HMRC are quick to take action once payments are overdue.

If payments don’t seem to be forthcoming, or the total debt has snowballed to a large amount, HMRC will start to petition that the offending business is wound up. Once such legal proceedings have been made against your company, it can be difficult to get back on track. An HMRC Time to Pay arrangement avoids this situation altogether (although not if payments are missed after negotiating a plan).

Implement growth plans

Paying a large tax bill in one go can create a serious dent in a company’s cash flow. As such, any growth strategies that had previously been planned often have to be shelved as focus is diverted onto how to pay the debt instead.

By using an HMRC Time to Pay arrangement for troublesome tax debts, businesses are not only able to resolve their tax burden, but also look forward to the future. It’s difficult to plan for the future when the company’s existence is threatened today. By securing a manageable payment plan though, thoughts can turn to how to improve the business.

Retain key staff

One of the most difficult things for an insolvent company to shed is its staff. On a personal level, it’s never pleasant to lay off workers, especially if you know they have families and other commitments. Looking at it from a business perspective, it’s difficult to replace the work that key staff contribute too.

If a business makes a number of workers redundant in an effort to cut costs and perhaps save the company, they also risk losing skilled staff that are difficult to replace. Spreading out the payments for a large tax bill in these circumstances then, can save the livelihoods of multiple people.

Protect your reputation

Building a business also involves the building of a reputation. Hopefully, that reputation will be one of professionalism and trustworthiness.

When businesses have to close or lay off staff, customers and suppliers may start to question how well the business is run. Of course, this is often unfair, but nevertheless, suppliers will wonder if your subsequent businesses are a safe bet to deal with, and clients will be nervous that the company disappears and leaves them without recourse.

An HMRC Time to Pay arrangement allows your business to continue trading and thus protects your business reputation. While there’s no shame at all in closing a company down (most entrepreneurs have done this before finding success with a later venture), some may feel self-conscious about their failure to keep the business alive.

Struggling with HMRC issues?

Whether you’re struggling to pay a VAT bill, missed your returns deadline, or simply not sure what you need to do, our team of expert advisors can help you. We work alongside HMRC every single day, and know exactly what they need, and how they can potentially help you.

A means to carry on trading

Put simply, an HMRC Time to Pay arrangement is often the difference between a company surviving or becoming insolvent.

Tax bills can be sizeable, and difficult to settle in one payment, so it’s no surprise that HMRC debt is one of the main reasons that UK businesses close. If you ever encounter a tax bill that threatens the existence of your business, remember that a Time to Pay arrangement can help.

Utilising the services of a specialist Time to Pay negotiation team such as our own makes it far more likely that your company will be accepted. Not only that, but our skilled negotiators can ensure that any payment plan is affordable enough for your business to adhere to.

Think your company might benefit from an HMRC Time to Pay arrangement?

We specialise in helping businesses to navigate difficult situations. Unwieldly tax debts are a common issue, and Forbes Burton’s specialist Time to Pay negotiation team have helped countless businesses to handle them.

As business rescue specialists, we’ll provide the best possible solution to any issues your company might be having. Call us on 0800 975 0380 , or email [email protected] for a free consultation.

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Setting up a payment plan with HMRC

The 31st of January is a key date for those of us who are registered for self-assessment. There are three deadlines:

The closing date to file your 2022-23 tax return without incurring an initial £100 late filing penalty.
The date by which any balance of tax, NIC, or student loan payback needs to be made for 2022-23.
Due date for making the first payment on account for 2023-24.

What to do if you cannot afford to make these payments

HMRC will allow taxpayers who cannot meet these tax payments by 31 st of January, to spread the cost by applying for a formal HMRC payment plan.

The instructions posted on the GOV.uk website are reproduced below:

Setting up a payment plan

To set up a payment plan you will need:

the relevant reference number for the tax you cannot pay, such as your unique tax reference number;
your UK bank account details – you must be authorised to set up a Direct Debit; and
details of any previous payments you have missed.

You may be able to set up a payment plan online, depending on which type of tax you owe and how much you owe.

If you owe tax from self-assessment

You can set up a self-assessment payment plan online if you:

have filed your latest tax return;
owe £30,000 or less;
are within 60 days of the payment deadline; and
do not have any other payment plans or debts with HMRC.

HMRC will ask you about your income and spending when you set up your plan.

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How to Set Up an HMRC Payment Plan for Self-Assessment Income Tax

As the deadline for 2022/23 self-assessment tax returns and payments draws closer, you must take pre-emptive action if you cannot pay your obligations on time. HMRC normally issues a reminder letter initially if your tax return or payment is not received by 31st January.

However, if you haven't made a payment, set up an instalment schedule or contacted the tax office, you will start to accumulate late filing penalties and interest charges and potentially attract further investigation. In the worst case scenarios, HMRC may send a tax inspector to visit your home or workplace or instruct a debt collection agency to operate on its behalf.

For most taxpayers, there is the option of setting up a payment plan online, and it is advisable to do so promptly rather than waiting for a reminder notice. Late payment interest accrues from the first day over the deadline.

Setting Up a Payment Plan With HMRC

If you can't pay the full amount of tax owed on time, you can normally create a payment plan called Time to Pay. Note that this isn't universally available, and if you select this option online, you may see a screen that indicates you are not permitted to proceed – in which case you should contact HMRC as soon as possible.

The tax office will only accept payment plans provided:

You have filed your tax returns up to date – you can set up a Time to Pay arrangement as soon as your tax return has been received and is showing on your online tax account.

The amount owing is £30,000 or less.

You request a payment plan within 60 days of the payment due date.

There are no other ongoing payment plans or overdue taxes owing to HMRC.

Businesses can also request payment plans for PAYE contributions and VAT owed, but again, there are limitations. In some scenarios, HMRC will not accept a payment plan; in others, it will require you to utilise savings towards your tax bill if you have cash assets available that could cover the full amount.

Employers can request payment plans for PAYE and VAT obligations of £50,000 or less, provided they comply with the eligibility requirements. Similarly to self-assessment income taxpayers, these include being up to date with returns and not having other payment plans.

Information Required to Set Up an Income Tax Time to Pay Agreement

When you apply for a payment plan online, you'll need to answer a series of questions and provide all the requested details. These include your Unique Tax Reference number (UTR), the details of the bank account you intend to make payments from, and the information about missed payments.

Otherwise, you should ring HMRC, where a tax official will often ask why you cannot pay in full and how much you believe you can pay each month going forward.

If there are any exceptional circumstances such as redundancy, ill health or bereavement, you should inform HMRC – the tax office is often more sympathetic if there is a reason outside of your control that has led to you being unable to pay your taxes on time.

What Payments Will HMRC Accept on a Time to Pay Agreement?

HMRC will assess your income, monthly outgoings, savings and investments. It uses this information to arrive at a monthly payment amount, normally based on half of your remaining income, based on your earnings, less accommodation, utility, grocery costs and any fixed monthly outgoings.

If the tax office doesn't think you will keep up with a payment schedule or can reasonably make other arrangements to bring your tax affairs up to date, it may refuse a payment plan request.

How Long Does an HMRC Payment Plan Run For?

Payment plans are designed to help those who cannot make their tax payments in full, and it is advisable to clear the debt as soon as possible. The longer it takes to pay, the more you will accrue interest charges, so a payment plan isn't a 'cheaper' solution.

The tax office may also require you to increase your repayments or pay your tax bill in full if your circumstances change, such as moving to a new job or receiving a higher salary.

Missing a payment on a pre-agreed schedule will prompt further action from HMRC. Usually, a tax official will contact you to find out why you have missed the payment and to revisit the agreement.

Advice on Setting Up an HMRC Payment Plan

Depending on your tax position and any previous requests to pay your tax liabilities in instalments, HMRC may expect you to contribute towards future tax obligations through the payment on account system.

As most self-employed taxpayers will know, the system requires you to make payments on account towards the anticipated tax arising in the current tax year, alongside settling the final balance owing on the previous tax period.

That could mean making monthly payments towards your previous tax charges, plus amounts on account to ensure you aren’t continually in arrears or won’t become overdue automatically when your next payment on account due date arrives on 31st July.

If you need advice about managing overdue taxes, submitting your self-assessment tax return or requesting a Time to Pay agreement, please get in touch with the SAS Accounting team anytime.

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Tax & Admin

What are your options when you have difficulties paying hmrc.

Allison S Robinson | 22 October 2021 | 3 years ago 0 0 0

What tax payers need to know

Paying your taxes, when do you have to pay hmrc.

31 January – for any tax you owe for the previous tax year and your first payment on account
31 July for your second payment on account

How can I pay HMRC?

Direct debit
Debit or corporate credit card
Certificate of tax deposit

Spreading the cost of your bills to HMRC

What happens if I ignore the bill?

Taking money directly
Taking control of your goods – distraint

Court action
Bankruptcy proceedings

Where can I get advice about tax bills?

https://taxaid.org.uk/
https://www.citizensadvice.org.uk/debt-and-money/getting-tax-advice/
https://www.gov.uk/legal-aid can assist in covering costs if you have to go to Court regarding your Tax affairs.

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Corporation Tax

Cannot Pay Tax on Time? Learn About Corporation Tax Payment Plan!

Updated on July 7, 2023

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For some reason, limited companies may get to a point they unable to pay or be late at paying their taxes. When this happens, talking to HMRC straight away is key to avoiding heavier repercussions. This was prevalent during the pandemic when many companies went insolvent; that is, they could not pay what they owed to the tax authority on time or at all.

Fortunately, HMRC provides payment alternatives, one of them being the corporation tax payment arrangement , which we will discuss thoroughly in this article. This comprehensive guide will cover the topics revolving around time-to-pay arrangement, including its interest rate, eligibility, requirements, duration, process, issues about missed payments, and self-assessment payment helpline.

What is Time-to-Pay Arrangement?

HMRC’s Debt Management (DM) offers a lenient tax payment option for every qualifying limited company facing financial difficulty and insolvency in the form of time-to-pay (TTP) arrangement. This allows them to pay their debt tax es in instalments of the agreed amount, spread over a few months, so they can get back to getting their tax return up to date. Take note that TTP doesn’t concern income tax .

Companies with annual profits less than £1.5m pay corporation tax on a one-off basis, whilst those earning above such amount would pay in four instalments throughout the year. Once they anticipate they cannot pay their dues in full on the due date or be able to pay at all, they should notify HMRC right away and start o n their tax planning immediat ely .

The sooner they communicate to HMRC about their status, the less likely HMRC would enforce strong debt recovery actions against them and the more likely to be granted a TTP payment arrangement, along with other options. Ignoring HMRC’s bill reminder/warning letter for overdue taxes that escalate to an arrear may pose serious consequences for them, such as penalties, court actions, and, worse, bankruptcy.

For instance, it would result in their winding up petition, forcing the companies to undergo liquidation in which the insolvent companies have to sell their assets, leading to their businesses’ shutdown, most especially if the taxes they owe have reached £750 and more.

Immediately communicating to HMRC about their situation is the most proactive way for companies to deal with their tax debt, as it implies they are not deliberately evading their tax obligations.

HMRC may use debt collection agencies to collect companies’ TTP dues. These registered bailiffs are given the same power as HMRC but can only contact companies via letter, SMS text, or telephone. Since they cannot do personal visits, once a company director fails to pay according to its agreed TTP schedule, they will then refer back the case to HMRC, which may result in further enforcement action.

Interest Rate on Time-to-Pay Arrangement

what is the interest rate on late tax payments

Who is Eligible for This Corporation Tax Payment Plan?

HMRC does not easily give TTP arrangement opportunities for limited companies , but they do to those with valid circumstances, recognising they need help in the face of tax debt and insolvency. The tax authority is more sympathetic to limited company directors on tax arrears who are unable to pay because of particular unforeseen problems such as insolvency of a major customer or a sudden illness .

Does a sole trader pay corporation tax ? Sole proprietors do not, which is why the TTP arrangement does not apply to their income . Companies that are eligible to use HMRC’s automated online service to arrange TTP payment arrangements should meet the following criteria:

They owe less than £30,000.
They want to clear their debt within 12 months.
They have updated corporation tax return .
The overdue payment deadline days are still within 60 days .
They have no other tax debts.
They currently have no other instalment plans.

They may also be better considered for TTP eligibility when they belong to a certain business niche. HMRC particularly avoids certain sectors that prove to be unreliable in previous years. How well they have followed through with their tax account responsibilities also determines their likelihood of getting a TTP arrangement.

Requirements for Making Time-to-Pay Arrangement

Before limited companies contact HMRC, they should have the following information ready beforehand:

Company registration number
Company address
Company telephone number
Unique Tax Reference number
VAT registration number
Details of t ax payment s they would like to discuss
Any current or future repayments from HMRC

They also need to prepare an explanation as to why they find it hard to pay their corporation tax bill, the actual steps they have made so they can obtain funds for paying the debt (e.g., ongoing expenses, projected income), and a proposal on how they would strive to repay it.

If their cash flow problem is caused by the Coronavirus pandemic, they will also need to inform HMRC straight away as they may provide a more lenient approach, especially with the duration of the TTP arrangement they will get, which will be discussed further below.

How Long Does Your Time-to-Pay Arrangement Lasts?

TTP arrangement is usually granted with a duration of 6 to 12 months, but it could last longer for companies with special reasons such as COVID-19. However, HMRC prefers limited companies to pay their debts as quickly and on time as possible.

The duration is entirely up to HMRC. Paying TTP late would result in a costlier instalment option in the long run. Granting a longer instalment period may be rare for HMRC but it is possible, as long as companies can prove the severity of their situation yet can afford to pay given a longer instalment time.

Process: Time-to-Pay Arrangement

After preparing the requirements needed, as discussed above, companies can then proceed to contact HMRC and negotiate a TTP arrangement. Here are what they need to know about the process:

• Agreeing a n Instalment Plan

Limited companies should only agree with an instalment plan they can follow through. They need to make sure they can commit to the period and amount before agreeing to the term, as they still have to pay current or future tax return liabilities. HMRC takes their petition more seriously if they speak out their disagreements and do not just easily agree with whatever HMRC recommends.

For HMRC, this would mean they are serious about committing to the agreement once it starts. It would greatly help to inform HMRC that they are seeking help from tax professionals so they can make the best decisions.

• If Proposed Instalment Plan is Accepted

When the DM or HMRC-registered office for debt collection agrees to the companies’ petition for TTP, they will receive a written confirmation afterwards. They may also just provide a verbal agreement, in which case the companies should request a written deal.

This is to avoid any disputes regarding the agreement that may arise in the future and avoid possible late payment penalties. Generally, TTP arrangements are made flexible in case the companies’ financial situation gets worse.

• If Proposed Payment Plan is Rejected

HMRC does not grant every company request for instalment payment, most especially if they already have had a TTP arrangement in the past, although this doesn’t mean they are automatically opt-out of another payment arrangement.

Companies without convincing arguments or evidences will need to continue paying their tax debts as much as they can. Unfortunately, bankruptcy may be inevitable as HMRC has strong debt recovery enforcement. They may force such companies into liquidation or perform court action, which ultimately leads to their bankruptcy. However, as much as possible, HMRC considers these actions as a last resort.

What if You Missed a Payment?

Failing to comply with the TTP arrangement leads to more serious consequences. HMRC will most likely cancel the agreement and impose a penalty. When this happens, legal action called Distraint Order Notice may most possibly come next.

With a Distraint Order Notice, HMRC will forcibly seize the companies’ assets. They may also perform a Winding up Petition that will consequently force the companies to liquidate their inventory, which is a very serious implication for their directors. When this happens, it’s best that they consult an insolvency practitioner to guide them through this difficult situation.

Self-Assessment Payment Helpline

Companies have several helpline for their complaints or appeals regarding their self-assessment payment. Even if they cannot pay their tax returns dues , they have the right to make appeals, challenge HMRC’s decisions, or make complaints.

They can get free advice from any of the following organisations for free:

Step Change debt charity

How Experts Can Help

If you cannot pay your tax bill on time. (n.d.). Retrieved from Gov.Uk: https://www.gov.uk/difficulties-paying-hmrc

What is an HMRC Time to Pay (TTP) Arrangement? (n.d.). Retrieved from Company Debt: https://www.companydebt.com/hmrc-tax-problems/time-to-pay-hmrc/

Seeking time to pay. (n.d.). Retrieved from Tax Aid: https://taxaid.org.uk/guides/taxpayers/tax-debt/time

How to set up a payment plan for your taxes with HMRC. (30 June 2021). Retrieved from WOW: https://www.thewowcompany.com/blog/how-to-set-up-a-payment-plan-for-your-taxes-with-hmrc

Corporation tax: What is it and what if you can’t afford to pay? (n.d.). Retrieved from Real Business Rescue: https://www.realbusinessrescue.co.uk/tax-hmrc/corporation-tax-what-it-is-and-what-happens-if-you-cannot-pay

What if I cannot pay my tax bill? (n.d.). Retrieved from Low Incomes Tax Reform Group: https://www.litrg.org.uk/tax-guides/tax-basics/what-if-i-cannot-pay-my-tax-bill

Cannot pay corporation tax bill – what options do I have? (n.d.). Retrieved from UK Liquidators: https://www.ukliquidators.org.uk/company-debt-advice/cannot-pay-corporation-tax-bill-what-options-do-i-have

Tax and other debts owed to HM Revenue and Customs. (n.d.). Retrieved from NI Direct: https://www.nidirect.gov.uk/articles/tax-and-other-debts-owed-hm-revenue-and-customs

Beyond the balance sheet. (27 June 2022). Retrieved from Wellers: https://www.wellersaccountants.co.uk/blog/payment-on-account

Apart from being a partner at Legend Financial, Junaid is an expert on Business Tax including business management advisory services which has proven in the growth of company. He is a promising advisor with an ideology; "Any business success depends on the level of objectivity it maintains."

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Apart from being a partner at Legend Financial, Junaid is an expert on Business Tax including business management advisory services which has proven in the growth of company. He is a promising advisor with an ideology; “Any business success depends on the level of objectivity it maintains.”

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Will HMRC Give Me Time to Pay My Tax Bill?

Whilst it is true that you are much more likely to have a Time to Pay arrangement request agreed to if you have conducted your tax affairs well in the past, i.e. by being up to date with what is due. However, we can still look to help even if you have a poor compliance history with HMRC, it may just take more negotiating in order to come to a mutually agreeable solution.

If you need more time to pay your tax bill, a Time To Pay instalment plan may be a viable solution for your company and Real Business Rescue 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 helps to have a little knowledge on what the process entails and how likely you are to have this accepted by HMRC.

Negotiating More Time to Pay Company Tax Debts with HMRC

If you need more time to pay your Corporation Tax, PAYE , or VAT bill, this possibility needs to be negotiated with HMRC. 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 your limited company's cash flow position. You will need to put forward your case explaining why you are unable to pay the tax owed, and how much you are able to offer as a monthly payment.

When asking for additional time to pay your tax debt, it is important to be honest about the amount your company can comfortably afford and not to overstate this figure. HMRC will not agree to any Time to Pay arrangement unless they are confident that you will be able to keep up with the payments; offering to pay more than you can realistically afford will sound alarm bells and could well see your Time to Pay proposal being refused or rejected .

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Asking HMRC for a Time to Pay plan

During the call HMRC will also assess:

The long-term viability of your company
The probability of a Time to Pay plan being successful
Appropriate alternatives if you don’t keep to the planned repayments as agreed

The interviewer will use this opportunity to advise you of your rights and what the penalties may be if you don’t keep to the arrangement or falsify information in any way.

While you can conduct the negotiations with HMRC directly, you may prefer to enlist the help of a professional to put forward your case on your behalf. At Real Business Rescue, our licensed insolvency practitioners have vast experience of dealing with HMRC and negotiating Time To Pay arrangements for our clients. If you would prefer not to handle this process yourself we can contact HMRC and liaise with them on your behalf using our expert knowledge to give your company the best chance of getting this arrangement in place.

Dealing with HMRC debts?

If you are experiencing pressure from HMRC for unpaid tax liabilities, you are far from alone. In fact HMRC is the most common creditor of businesses in the UK. For expert help and advice in tackling your tax debt, call our team. The team are available now - 0800 644 6080

How Much Additional ‘Time to Pay’ Will I Be Given?

First and foremost, when considering the possibility of a Time to Pay arrangement, HMRC will look at the ongoing viability of the company in question. They understand that even well-run businesses experience cash flow problems from time to time, and are therefore willing to listen to those businesses in genuine financial difficulty who have done their best to keep up to date with their tax affairs.

A Time to Pay arrangement is set for a defined period, but each case is judged on its own merits so the length of time given does vary from company to company. Time to Pay arrangements lasting more than a year are rare, but achievable dependent on the circumstances. If your company needs a longer instalment plan, other restructuring options may be more suited to your needs. Real Business Rescue’s licensed Insolvency Practitioners can assess your company’s financial situation and discuss the other routes you could take should your tax debts be causing cash flow problems.

Principles and Guidelines of Time to Pay

Entering into a Time To Pay arrangement does not reduce the total amount of tax owed, it simply allows for the balance to be cleared in a series of more affordable instalments. Here are a few of the key principles and guidelines of a HMRC Time To Pay Arrangement:

Customers MUST make a reasonable proposal in terms of what they can afford over a specific time period

HMRC needs to be satisfied that you (the customer) will not have the ability to meet the tax due date without a Time to Pay arrangement in place

Time to Pay is to provide extra time for those companies experiencing financial problems, not for those wishing to use the money elsewhere (i.e. for expansion or investments). Essentially, you need to be willing to pay, just unable to do so at the present time.

If the company’s financial circumstances change in any way, either for the better or the worse, you must notify HMRC immediately

The instalments are to be over the shortest time period reasonably possible

HMRC’s decision is ‘risk based’ so if there is a greater amount of risk, they may require further information before reaching a decision

Keep in mind that the most important stipulation is that your company lacks the ability to pay its taxes on time. HMRC will not agree to a Time To Pay arrangement for any other reason.

Entering into a Time To Pay arrangement will ensure you do not face the late payment penalties HMRC impose on those that do not pay their tax bill on time . However, you will be charged interest on the amount of tax still outstanding.

Need to speak to someone?

If your company is struggling with unmanageable debts, squeezed cash flow, or an uncertain future, you are far from alone. We speak to company directors just like you every single day, and we are here to give you the help and advice you need. Call our team today on 0800 644 6080

Can HMRC Cancel a Time to Pay Agreement?

According to law, once agreed to, HMRC must keep to the arrangements except under exceptional circumstances. If there are any changes in your company’s situation which means it is no longer supportive of the agreed time to pay arrangement, they have the right to withdraw. Honesty is imperative and if HMRC discover that you have falsified or misled them in any way during the application process, they can, and often will, terminate the agreement.

What happens if I fail to keep up with the Time to Pay?

If you default on the agreed payments then HMRC are then able to break the agreement themselves, and if your situation worsens they will reassess the amount of risk. Remember, Time to Pay is for temporarily distressed companies that have the capability of future viability. If you should be wound up by a creditor or are on the verge of becoming wound up, any outstanding Time to Pay agreement may very well be cancelled.

What if HMRC reject or refuse my company a Time to Pay?

There are several reasons why a Time to Pay proposal may be rejected by HMRC. For many companies it comes down to the simple fact that HMRC have reason to doubt the company's ability to clear the entire balance in a timely manner; for others that have a track record of not paying HMRC or keeping them waiting for payment, HMRC may be unwilling to consider such an arrangement as a matter of principle.

If you have been refused a Time to Pay, or you believe your application is likely to be rejected, you may need to consider a formal insolvency solution such as administration or liquidation to solve your company's financial problems.

If you are delinquent on VAT, PAYE or corporation tax , Real Business Rescue can advise you on whether or not Time to Pay is an option worth pursuing. This may be a viable solution to your tax arrears, but there may be other more suitable alternatives to explore. Contact us for a free initial consultation so that we can help you prepare for your interview with Time to Pay. Better yet, we can offer comprehensive support and advice on all matters concerning your company’s debt situation.

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How to make a payment plan with HMRC

Setting up Payment Plans with HMRC

Sometimes a business may find itself in the unfortunate position of being unable to pay its taxes on time. There are a number of reasons that this might happen, for example you may have not realised that your business was liable to register for VAT and are suddenly facing a backdated VAT bill, or the business may simply be facing a sudden economic down-turn. Whatever the reason, if you aren't able to pay, you are entitled to ask HMRC to setup a payment plan for you to help ease the burden.

Late Payment Penalties

Before we begin you need to know that simply ignoring the problem is not the solution. If a business fails to make payment of its taxes on time, HMRC can issue late payment penalties for any taxes unpaid. The size of the penalty depends on two factors, how big the tax bill is and how late it is paid.

If a business is genuinely unable to pay its taxes, adding financial penalties into the mix can create additional stress and add further problems to cash flow.

If your business finds itself in such a position, HMRC will allow you to set-up a payment plan with them.

So long as your business sticks to the agreed payment plan, HMRC will not issue any late payment penalties on the unpaid tax and they will not issue legal proceedings and/or send debt collection officers to the business premise.

However, if your business fails to stick to the payment plan this will restart the process and the business may find itself penalised.

Only agree to a payment plan if you and your business are able to stick to it.

How to Set Up a Payment Plan with HMRC

The only way that you can set up a payment plan with HMRC is to call the dedicated telephone line (see bottom of this page for link).

The operators on this line are known for being incredibly tough, attempting to apply pressure to get you to pay your tax rather than setting up a plan (or setting up a plan that is less favourable so that HMRC gets paid faster). While we believe that paying taxes is the right thing for society, businesses need to be able to survive so that they can continue to contribute. To avoid putting your business in a more difficult position than necessary, there are some things to do in order to be prepared for the call that we will outline below.

Note: Even though your accountant is authorised to file your taxes, they are not authorised to arrange a payment plans on you or your businesses behalf. The only people authorised to do this are the business owners, so you must make this call yourselves.

Steps to take before the call:

Step 1 - write down your reason for not being able to pay the tax on time down.

One of the first questions the operator will ask is "Why is your business unable to pay it's taxes on time?".

Writing down the reason might feel strange and we aren’t encouraging people to fabricate reasons, however, by it's very nature this call will be uncomfortable and we know that if you aren’t prepared for this question then, when asked on the spot - especially if you’ve been on hold for a long time and you’re multitasking - you might panic, freeze or waffle. All of these things can lead to a more difficult call, especially if the agent is particularly tough. Ensuring that you have your reason written out in front of you will mean you will have thought about it properly in advance and will be able to answer without feeling like you're on the back foot.

While writing out your reason we suggest properly thinking about what went wrong and writing a few bullet points to show what processes you’re going to put in place so that it won’t happen again (as these are likely to be follow-up questions).

Step 2 - Calculate how much tax you can pay right now

One of the conditions for setting up a payment plan will be that you need to make a one-off payment while on the call. Therefore you will need to know how much you and your business can afford to pay towards the tax bill straight away. This will be difficult to calculate on the spot, which is why we suggest giving it some proper thought in advance of your call.

As you can imagine, the agent on the phone will most likely try to have this increased as much as possible, for example by asking why you cannot pay more and how you know this is all you can pay. By calculating ahead of the call you will know how much you can afford to pay and why.

Do not feel pressured, if you cannot afford to pay any more then tell them that you have calculated it and you cannot afford to pay more than stated

Step 3 - Calculate how much you can afford to pay each month

Calculate how much you can afford to pay each month and how many months it will take you to repay the full amount. HMRC will apply interest to the outstanding balance, so we suggest adding an additional month or two onto the calculation so that you know you can afford the interest too.

Note: The interest rate that HMRC use is much lower than that of a bank. Therefore we do not recommend taking out a loan or using a credit card when arranging your payment plan.

As we mentioned above, in order to avoid having penalties charged against your business, you will need to be able to stick to the agreed payment plan. Therefore if you have made your calculations in advance and if the agent on the telephone attempts to pressure you into a different plan, be strong and tell them that you have calculated how much you can afford to pay and for how long. HMRC would rather your business survives and is able to pay more tax in the future, so although it might feel tough, should allow you to stick to your calculations - NB: So long as they are genuinely reasonable!

Write down your calculations and ensure that you have them to hand for when you make your call. As above, if HMRC pressure you to increase the payment amounts, explain your calculations and why you cannot pay more.

Note: Don’t forget, you must still be able to save for any other taxes as they fall due. There is no point paying off a previous VAT return if you are now unable to pay upcoming VAT returns when they are due. Ensure that you take into account collecting and paying your other taxes while making this calculation.

Step 4 - Schedule and put aside time in your diary to make the call

Paying your taxes and arranging a payment plan with HMRC is a serious matter, however, because of this it can be an easy thing to continually put off. Do not fall into this trap as burying your head will only make matters worse. Put aside some time in your diary to deal with this matter and stick to it.

Do not fall into this trap as burying your head will only make matters worse.

Just before you phone HMRC (next step) ensure that you have the following details to hand:

Any tax reference numbers for the tax in question (VAT number for VAT, UTR for Corporation Tax, PAYE numbers for PAYE, etc)
The reporting period that is currently unpaid
You business debit or credit card
Notes and calculations from steps 1 to 3

Step 5 - Make the call to HMRC

Finally, now that you are fully prepared - Phone HMRC using the details found here: https://www.gov.uk/difficulties-paying-hmrc

Step 6 - Stick to the payment plan

Now that you have completed your call and made the initial payment, ensure that you stick to the payment plan and there should be no further problems. If you are suddenly unable to stick to the plan, ensure you telephone HMRC as soon as you know as it is always best to have an open dialogue with them.

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What are VAT Payment Plans?

If you can’t pay your VAT on time or in full, you should contact HMRC’s Payment Support Service on 0300 200 3835 immediately to make them aware of the situation.

By contacting HMRC, you may be able to avoid late payment penalties, which will only make your financial situation worse, and be able to arrange a payment plan that gives you:

More time to pay
Allows you to pay your bill in instalments by direct debit.

What is a Time to Pay Agreement?

If your company can’t pay VAT, you should contact HMRC to ask for a ‘Time to Pay Arrangement’ (TTP).

HMRC provides a ‘Business Payment Support Service’ that businesses can use if they are struggling to make a payment.

SMEs that are experiencing cash flow problems but which have a good compliance record should be able to make a Time to Pay arrangement with HMRC to pay their VAT bill over a longer term and in instalments.

Why is the Business Unable to pay VAT?

Being unable or late to pay your VAT is a serious issue and HMRC will understandably want to know why this problem has occurred. One of the of the most important things HMRC will want to know is whether the business is genuinely unable to pay its VAT bill or if the company directors are simply unwilling to make the payment.

It is not uncommon for directors to have invested their working capital in growing the business rather than paying their tax liabilities, and in this case, it will be difficult to reach a Time to Pay arrangement.

What are the Criteria for an HMRC Time to Pay Arrangement for VAT?

When discussing your circumstances with HMRC, the Business Payments Unit will want to know:

Why the company is unable to pay its VAT in full and on time
Whether you filed your VAT return on time
What you have done to try and raise the money to pay the debt
How much you can pay immediately
How long you think you will need to pay the rest

Depending on the reasons why the company can’t pay, what your payment history has been and how long you need to pay the bill, HMRC will assess your ability to make the future payments and decide whether to agree to a VAT payment plan.

Deciding how much you can Afford to pay in Installments

It’s essential you are realistic about how much of your VAT bill you will be able to repay each month. If you are unable to keep to the arrangement then the payment plan could be cancelled and penalties could apply. It will also be much more difficult to arrange another VAT payment plan if you have already defaulted on one. However, you also need to offer to repay an amount HMRC considers to be reasonable enough or it may refuse your proposal.

Need Advice?

Are you unable to pay your VAT bill in full and on time? We are regularly in contact with HMRC and have vast experience arranging VAT payment plans. For confidential, no-obligation advice, please contact 020 8444 3400 .

Tax bills: setting up an HMRC payment plan

T hree things are certain in life, and one of them is definitely taxes. They’re enshrined in law, rates are set by the Government and the money raised usually pays for vital public services like transport, housing and healthcare.

If you’re a worker, it’s deducted from your wage automatically before you receive it.

For businesses and the self-employed however, they pay directly to HMRC. How much this is depends on a range of factors, most importantly the profit made – but also any VAT owed, how many employees they have and the salaries they provide.

There are serious consequences for non-payment. In the Budget, Chancellor Jeremy Hunt pledged to provide extra funds for HMRC to recover billions in unpaid tax.

As a self-employed person, it’s hard to predict the future and you could end up without the money to pay your tax bill – maybe because it was higher than you anticipated or because of a sudden, unexpected expense.

In these cases, there are solutions with HMRC sometimes offering more time to pay your dues.

This guide will explain how HMRC’s tax payment plans work, how to approach it if you don’t have the money, and what happens if you don’t pay.

What is HMRC time to pay?

Usually, after filling in your tax return as a self-employed person, you will simply pay your bill, or make a “payment on account”.

A time to pay (TTP) arrangement is a payment plan offered to businesses or self-employed people who can’t pay their debts to HMRC on time and in full. It offers payments spread over a set period.

It can be used for any HMRC debt, but they are usually for unpaid self-assessment income tax, employer PAYE contributions, corporation tax and VAT bills.

Who can set up a HMRC payment plan?

TTPs are available for individuals and businesses, but only if HMRC thinks you can keep to it. They cannot reduce the amount owed or address future tax bills, which still need to be paid alongside your plan.

If you get a tax demand and don’t pay or contact HMRC, the amount will be demanded in full. This comes with serious consequences, which could include bankruptcy or the forcible closure of your business.

How to set up a payment plan with HMRC

You might be able to set one up online if you have the relevant tax reference number, details of missed payments and a UK bank account. You will need to authorise direct debits.

To be eligible to apply online, you cannot have any other open payment plans or debts with HMRC at the time.

For a self-assessment payment plan, you must also have filed your latest tax return and owe less than £30,001. You’ll also need to be no more than 60 days past the payment deadline.

If a company owes employers’ PAYE, you must have missed the deadline, owe less than £50,001 and aim to pay it within 12 months. The debts also have to be less than five years old and you must have sent any employers’ PAYE submissions and Construction Industry Scheme returns due.

For businesses that owe VAT, you must also be past the deadline, owe less than £50,001 and aim to pay within a year. However, you also need to have filed all tax returns and have a debt for an accounting period starting in 2023 or later.

If you’re in the Cash Accounting Scheme, Annual Accounting Scheme, or you make payments on account, you can’t set one up online. This also applies to any corporation tax debt.

If you’re not eligible to set one up online, you’ll have to contact HMRC to discuss it.

Which questions will I be asked?

As an individual, you’ll be asked how much you can pay, how much you earn and spend, other taxes you need to pay and which savings and investments you make. Once your essential spending is accounted for, HMRC will expect you to pay around half of what remains towards your debt.

Companies will have to explain how they’ll pay as quickly as possible and are expected to reduce their debt as much as they can before setting up a TTP. This includes options like selling stock, vehicles or shares. HMRC may also make requests of company directors, such as lending the business money or extending credit.

What do I need to prepare?

An individual will need to know how much they spend on rent, food, utility bills and fixed outgoings, like subscriptions.

For businesses, you’ll be asked for historical accounts and projections of cashflow, profit, loss and affordability for the TTP.

Julie Palmer, from insolvency experts Begbies Traynor, said: “They might ask for a bit of background on why the debt has arisen and what will be different to enable you to pay it back. They may also want to understand how much money directors are taking out of the business, particularly if it’s quite a lot.

“Have all your information ready, do your forecasts and understand everything. The last thing you want to do is make an empty promise and not be able to keep it.

“If you need to, take specialist advice. HMRC will take comfort in the fact that someone independent has looked at the numbers and is confident there’s a viable business that can survive.”

There is no obligation for HMRC to give you a payment plan.

If your request is accepted, what are the next steps?

Whether you applied over the phone or online, you will receive a letter confirming your TTP payments and conditions. This will show how much is due and when, which will come out by direct debit.

You can pay more than your TTP requires before it’s due, if you choose to, by contacting HMRC. Given interest is charged on any debts, this could save you money.

There’s no limit to how long an agreed plan can last, but HMRC says it’s “exceptional” to get one for more than 12 months. It also says TTPs are designed to be flexible, rather than fixed formal contracts. This means it could be shortened if you receive a cash windfall, or lengthened if essential expenses increase.

If HMRC finds out that your circumstances have changed, they can contact you and ask you to pay a different amount. If your circumstances do change, it is more prudent to contact them proactively.

Ms Palmer said: “It’s getting more and more difficult to get a plan. We’re also seeing HMRC contacting companies to collect more money to accelerate the plan. This tends to be where it’s agreed verbally, so people should definitely get an agreed plan in writing.”

What happens if your request is refused

HMRC can take action if you cannot agree an instalment plan, or you refuse to pay. This may include instructing a debt collection agency, taking what you owe directly from your wages or selling your possessions or assets.

They can also take money directly from your bank account, begin court action, make you bankrupt or, if you owe a business tax, close down your company.

Any costs incurred during these processes are usually added to what you owe.

What to do if you cannot afford to make the payments in your TTP

If your circumstances change and you can’t make an agreed payment, it’s best to contact HMRC before missing a payment. If you don’t, they will cancel your plan and demand full repayment.

Ms Palmer added: “Start the dialogue as quickly as possible. If it’s short term, you might find there’s some flexibility. If you’re having to make repeated requests, it might be a sign you can’t keep to it and the business might not be sustainable.

“During the pandemic, HMRC offered more forbearance, but those days are over and there are companies with a lot of debt that’s owed.”

Other considerations when looking into a tax payment plan

You may feel unable to make and keep to a TTP. It’s also not your only course of action and won’t work for everyone. Ms Palmer said that the first option for major debts should be to “take specialist advice”.

“There is a whole range of rescue options in the insolvency legislation. Don’t assume that trying to fight the good fight with your existing business is the best way, particularly if you’re putting in a lot of your own money,” she added.

“Take proper advice because there might be better options than a payment plan, particularly if your business simply isn’t going to survive.”

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Payment Plan HMRC: Unveiling the Shocking Reality for Directors!

In this article, we will delve into the reality of setting up a HMRC payment plan , a solution that allows you to pay your Self Assessment tax bills on a weekly or monthly basis. We will uncover the process, benefits, and potential pitfalls of this approach, providing you with a comprehensive guide to help you make informed decisions about your tax payments. This article explains the payment plan hmrc.

Whether you’re a self-employed individual, a small business owner, or simply someone who finds themselves unable to pay their tax bill in a lump sum, this guide will shed light on the often misunderstood concept of HMRC payment plans. We’ll also introduce you to the “ Time to Pay ” arrangement, a specific type of payment plan offered by HMRC.

So, if you’re grappling with tax debt and seeking a manageable way to fulfil your obligations, read on. This article could be the first step towards regaining control of your financial situation.

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A payment plan with HMRC , often referred to as a “Time to Pay” arrangement, is essentially an agreement between you and HMRC that allows you to pay your tax bill over a period of time, rather than in a single lump sum. This can be particularly beneficial if you’re facing financial difficulties and are unable to pay your tax bill by the deadline.

The need for a payment plan often arises when an individual or business completes their Self Assessment tax return and discovers that they owe more tax than they can afford to pay at once. Self Assessment is a system HMRC uses to collect Income Tax. It’s used by people with complex or varied income sources, such as the self-employed, company directors, and those with high incomes from savings, investment or property.

When you complete your Self Assessment tax return, you calculate how much Income Tax and National Insurance you owe based on your income and expenses for the tax year. The resulting amount is your tax bill, which is typically due by 31st January following the end of the tax year.

However, if you’re unable to pay this bill in full by the deadline, you risk facing penalties, interest charges, and potential action from debt collection agencies. This is where a HMRC payment plan can come into play, providing a structured and manageable way to clear your tax debt over time.

Remember, it’s always better to contact HMRC and arrange a payment plan if you’re unable to pay your tax bill, rather than ignoring the problem and hoping it will go away. HMRC is generally willing to work with taxpayers to find a solution that suits both parties.

Setting up a payment plan with HMRC can be a lifeline when you’re struggling to pay a tax bill. However, it’s important to understand the implications of entering into such an agreement.

Firstly, a payment plan is not a way to reduce your tax bill. The full amount of tax owed must still be paid, but the payments are spread over a period of time to make them more manageable. This can provide significant relief if you’re facing a large tax bill that you can’t pay in one go.

Secondly, while a payment plan can help you avoid immediate financial hardship, it’s not a long-term solution to ongoing financial difficulties. If you’re consistently unable to pay your tax bills, it may be a sign that you need to seek financial advice or consider changes to your income or expenditure.

Now, let’s delve into the concept of “Time to Pay”. This is a specific type of payment plan offered by HMRC for those who are unable to pay their tax bill on time. It’s designed to help individuals and businesses experiencing temporary financial difficulties.

Under a “Time to Pay” arrangement, you agree to pay your tax bill over a period of up to 12 months, although in exceptional circumstances this can be extended. The payments are typically made on a monthly basis via Direct Debit.

To set up a “Time to Pay” arrangement, you’ll need to contact HMRC and provide details about your income, expenditure, assets, and savings. This information is used to assess your ability to pay and to determine a reasonable payment schedule.

It’s important to note that “Time to Pay” arrangements are not automatically granted. HMRC will only agree to a payment plan if they believe you genuinely cannot pay your tax bill in full and on time, and that you’ll be able to meet the agreed payment schedule.

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Setting Up a Payment Plan with HMRC

Setting up a payment plan with HMRC involves a series of steps. Here’s a step-by-step guide to help you navigate the process:

If you’re unable to pay your tax bill on time, the first step is to contact HMRC. You can do this online via the HMRC website. It’s important to do this as soon as possible, ideally before the payment deadline.

When you contact HMRC, you’ll need to provide details about your income, expenditure, assets, and savings. This information is used to assess your ability to pay.

HMRC will review the information you’ve provided and assess your ability to pay your tax bill. This will determine whether you’re eligible for a payment plan.

If HMRC agrees that you’re unable to pay your tax bill in full and on time, and that you’ll be able to meet the agreed payment schedule, they will approve a payment plan.

Once your payment plan is approved, you’ll need to set up a Direct Debit to make your payments. This is typically done on a monthly basis.

After setting up your Direct Debit, you’ll need to make your monthly payments as agreed in your payment plan.

Continue making your monthly payments until your tax bill is paid in full.

Here’s a visual representation of the process:

If your payment plan is not approved, you’ll need to explore other options for paying your tax bill. This could include borrowing money to pay your bill, or seeking advice from a debt advisor or insolvency practitioner.

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Setting up a payment plan with HMRC can offer several advantages, particularly if you’re struggling to pay a tax bill. Here are some of the key benefits:

Avoiding Debt Collection Agencies : If you don’t pay your tax bill, HMRC may pass your debt to a collection agency. This can lead to additional stress and potentially more costs. By setting up a payment plan, you can avoid this scenario and manage your tax debt directly with HMRC.
Managing Tax Debt Effectively : A payment plan allows you to spread the cost of your tax bill over a period of time, making it more manageable. This can help you to budget effectively and avoid falling into further debt.
Preventing Penalties: HMRC can impose penalties and interest charges if you don’t pay your tax bill on time. By setting up a payment plan, you can avoid these additional costs.
Maintaining a Good Relationship with HMRC : By demonstrating that you’re taking steps to manage your tax debt, you can maintain a good relationship with HMRC. This can be beneficial if you need to negotiate with them in the future.
Peace of Mind: Perhaps one of the most significant benefits of a payment plan is the peace of mind it can provide. Knowing that you have a plan in place to manage your tax debt can reduce stress and allow you to focus on other areas of your life or business.

Remember, while a payment plan can provide temporary relief, it’s not a long-term solution to financial difficulties. If you’re consistently struggling to pay your tax bills, it may be worth seeking financial advice.

Frequently Asked Questions

Here are some common questions and answers related to HMRC payment plans:

A Self Assessment payment plan is an arrangement you make with HMRC to pay your Self Assessment tax bill in instalments, rather than in one lump sum. This can be helpful if you’re unable to pay your tax bill by the deadline.

You can set up a payment plan with HMRC by contacting them directly, either online or by phone. You’ll need to provide details about your income, expenses, assets, and savings, which HMRC will use to assess your ability to pay.

Time to Pay is a scheme offered by HMRC for taxpayers who are unable to pay their tax bill on time. If you’re eligible, HMRC will allow you to pay your tax bill in instalments over a period of time.

If you can’t pay your tax bill on time, it’s important to contact HMRC as soon as possible. They may be able to set up a payment plan for you. If you don’t contact HMRC and don’t pay your bill, they may take action to collect the debt, such as using a debt collection agency.

While HMRC typically sets up monthly payment plans, they may be able to arrange a weekly payment plan in some circumstances. You’ll need to discuss this with HMRC when setting up your payment plan.

Remember, if you’re struggling to pay your tax bill, it’s important to seek advice as soon as possible. You can contact HMRC directly, or speak to a debt advisor or insolvency practitioner for help.

In conclusion, setting up a HMRC payment plan can be a viable solution if you’re unable to pay your tax bill on time. It allows you to manage your tax debt effectively, avoid penalties , and maintain a good relationship with HMRC. However, it’s important to remember that a payment plan is not a long-term solution to financial difficulties. If you’re consistently struggling to pay your tax bills, it may be worth seeking financial advice.

If your company is facing financial difficulties and you’re unsure of the next steps, Company Doctor is here to help. As licensed insolvency practitioners based in Leeds, we offer advice and solutions to directors with insolvent companies. We can guide you through the process of a Creditor’s Voluntary Liquidation, helping you to navigate this challenging time.

Don’t struggle alone – reach out to us today. You can call us on 0800 169 1536 or leave an enquiry on our website. Let us help you find the best solution for your company’s financial situation.

The primary sources for this article are listed below.

Self Assessment tax returns: Overview – GOV.UK (www.gov.uk)

HM Revenue & Customs – GOV.UK (www.gov.uk)

Contact HMRC – GOV.UK (www.gov.uk)

Details of our standards for producing accurate, unbiased content can be found in our editorial policy here .

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Hmrc forgot to tell brits about its digital support channels.

Appalling service levels at Britain's tax collector meant customers phoning in with inquiries were collectively left on hold for 798 years in fiscal 2023.

This is according to the National Audit Office (NAO), which found the time spent waiting in the 12 months to March last year was more than double the time wasted in fiscal 2020. It says digital channels intended to ease service pressures didn't help as expected.

The plan was to convince more citizens phoning in with questions about their taxes to consider using online services to resolve them more quickly. It was also intended to cut costs for His Majesty's Revenue and Customs (HMRC), and free up staff to tackle those needing extra support.

However, the NAO found that it is not clear how "far and fast digital will reduce demand for telephone calls and correspondence services." It also reckons digital services are best suited to "straightforward queries and reporting changes in customers' circumstances."

HMRC has not done enough to raise awareness of alternative customer service channels, said the NAO, and the "quality of service provided by HMRC telephone and correspondence has been far below the levels expected in recent years, and has not met annual targets."

The ultimate aim is to handle 80 percent of queries within 15 days and it managed 73 percent, albeit better than 45 percent rates achieved during the pandemic.

The NAO said the number of telephone calls to HMRC has reduced, yet the amount of time advisors spend on a call has increased – it was up to 23 minutes in the first 11 months of fiscal 2024. This means the call-handling workload pressures have reduced more slowly than forecast. More taxpayers hold multiple jobs and often have more complex needs, and fiscal drag has brought more taxpayers into the system, the NAO said.

This meant proposed headcount reductions could not be realized, the watchdog said. HMRC expunged 9 percent between fiscal 2020 and fiscal 2024. Budget constraints mean it now needs to cut staff numbers by 14 percent, according to the NAO.

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"HMRC must allow more time for these services to bed in and understand the difference they make before adjusting staffing levels."

This isn't the first time HMRC has been criticized for poor telephone support. The Public Accounts Committee also pulled the authority over hot coals in March .

An HMRC spokesperson told The Register : "While customer service standards on our phone lines are still not where we want them to be, we're making strong progress in our efforts to improve our customer service and additional funding has been confirmed by the government this week.

"Millions more people used our highly rated online services last year – saving them waiting on the phone and freeing up our advisors to deal with those people who need extra support. We continue to encourage people to deal with us online or via the app where they can, and we are working to provide even better, easier and always-available online services. But, as we have recognised, these changes need to happen at a speed and in ways that our customers are comfortable with." ®

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Setting up a payment plan with HMRC
HMRC Time To Pay Payment Plan
New HMRC Payment Plan: December 2022 Briefing
How to Check Your Business' HMRC Position
Setting up a payment plan with HMRC
What is a Time to Pay payment plan for VAT and HMRC tax debt?

COMMENTS

If you cannot pay your tax bill on time: Setting up a payment plan
If you owe tax from VAT. You can set up a VAT payment plan online if you: have missed the deadline to pay a VAT bill. owe £50,000 or less. plan to pay your debt off within the next 12 months ...
Time to Pay
If you need to speak to HMRC to set up a plan, you can use the Self Assessment payment helpline. The number is 0300 200 3820 and it's open Monday to Friday 8am to 6pm. Ask about Time to Pay. If you can't pay a different type of tax, look for contact details on any communication you've had from HMRC about the bill.
HMRC Time To Pay Arrangements
With an HMRC Time To Pay arrangement (TTP), you can repay debts to HMRC in monthly instalments, usually over a time frame of twelve months. However, some Time to Pay arrangements may take longer periods depending on the circumstances facing your business and affordability, some arrangements have been for up to 36 months.
PDF Timely payment
improve the Budget Payment Plan offer over the course of 2021-22.6 HMRC will use customer insight to make the plan easier to find and sign-up to, increase payment flexibility, and provide customers with guidance and a view of their plan they can understand. In addition, HMRC will look to market the enhanced Budget Payment Plan at key
How an HMRC Time to Pay Arrangement Can Save Your Business
By using an HMRC Time to Pay arrangement for troublesome tax debts, businesses are not only able to resolve their tax burden, but also look forward to the future. It's difficult to plan for the future when the company's existence is threatened today. By securing a manageable payment plan though, thoughts can turn to how to improve the business.
Understanding HMRC's Time to Pay Arrangement
Understanding HMRC's Time to Pay Arrangement to spread to cost of tax payments. In the current economic climate, marked by inflation and cost-of-living challenges, UK taxpayers may find the upcoming tax payment deadlines daunting. The deadline for clearing any tax arrears for the 2022-23 financial year and the first payment for 2023-24 is set ...
Setting up a payment plan with HMRC
You can set up a self-assessment payment plan online if you: have filed your latest tax return; owe £30,000 or less; are within 60 days of the payment deadline; and. do not have any other payment plans or debts with HMRC. HMRC will ask you about your income and spending when you set up your plan.
How to Set Up an HMRC Payment Plan for Self-Assessment Income Tax
The tax office will only accept payment plans provided: You have filed your tax returns up to date - you can set up a Time to Pay arrangement as soon as your tax return has been received and is showing on your online tax account. The amount owing is £30,000 or less. You request a payment plan within 60 days of the payment due date.
What are your options when you have difficulties paying HMRC?
Payment options will depend on your specific circumstances and the amount owed, but will usually include; paying your bill in installments with a payment plan or deferring payments. You can avoid penalties or interest payments by being open and honest with HMRC as soon as you know that you will have a problem paying your bill.
Cannot Pay Tax on Time? Learn About Corporation Tax Payment Plan!
Companies that are eligible to use HMRC's automated online service to arrange TTP payment arrangements should meet the following criteria: They owe less than £30,000. They want to clear their debt within 12 months. They have updated corporation tax return. The overdue payment deadline days are still within 60 days.
What is a Time to Pay payment plan for VAT and HMRC tax debt?
A Time To Pay Arrangement allows for your debt to HMRC tax to be paid back in monthly instalments, typically over a period of up to 12 months. Although depending on your business circumstances and affordability, some arrangements can be agreed over longer periods if you need more time to pay. If you are having trouble paying your tax bill, or ...
Ecommerce Accountants
Setting up Payment Plans with HMRC. Sometimes a business may find itself in the unfortunate position of being unable to pay its taxes on time. There are a number of reasons that this might happen, for example you may have not realised that your business was liable to register for VAT and are suddenly facing a backdated VAT bill, or the business may simply be facing a sudden economic down-turn.
What is Time to Pay? How to set up an HMRC payment plan
If you need to speak to HMRC to set up a plan, you can use the Self Assessment payment helpline. The number is 0300 200 3822 and it's open Monday to Friday 8am to 6pm. Ask about Time to Pay. If you can't pay a different type of tax, look for contact details on any communication you've had from HMRC about the bill.
What are VAT Payment Plans?
We are regularly in contact with HMRC and have vast experience arranging VAT payment plans. For confidential, no-obligation advice, please contact 020 8444 3400. If your company can't afford to pay its VAT bill in full or on time, you should contact HMRC immediately to try and arrange a VAT payment plan.
Five ways to pay your self-assessment tax bill
HMRC doesn't take personal credit card payments for tax, and you can no longer pay your tax bill at the Post Office. 3. Use the HMRC app. If you'd prefer, you can also pay your self-assessment bill via the free HMRC app. According to its statistics, 50,000 customers have already used the app to make tax payments since February 2022.
Tax bills: setting up an HMRC payment plan
How to set up a payment plan with HMRC. You might be able to set one up online if you have the relevant tax reference number, details of missed payments and a UK bank account. You will need to ...
Payment Plan HMRC: Unveiling the Reality!
It's important to note that "Time to Pay" arrangements are not automatically granted. HMRC will only agree to a payment plan if they believe you genuinely cannot pay your tax bill in full and on time, and that you'll be able to meet the agreed payment schedule. Freephone including all mobiles. 0113 237 9500.
Labour's plan to introduce VAT on school fees and payment in advance
Labour's plan to introduce VAT on school fees and payment in advance arrangements. With a General Election around the corner, which may lead to a change in Government, there is currently a lot of focus on Labour party policy. Labour has stated that it will exclude independent schools from VAT exemption, which will result in VAT on school fees.
Business woman present her idea to working team.Business colleagues
Business woman present her idea to working team.Business colleagues talking about plan or new project. Author. ... user-friendly AP systems can turn the tide, streamlining workflows, enhancing compliance, and opening doors to early payment discounts. Read... View article ... The funding comes alongside HMRC's long-term strategy for taxpayers ...
Tax helpline callers left on hold for nearly eight centuries
A more realistic plan to cut services being replaced with digital channels and to market them more effectively is something HMRC must consider, the watchdog concluded. "HMRC's telephone and correspondence services have been below its target service levels for too long," said Gareth Davies, head of the NAO.
HMRC: Taxpayers face longer waits of 23 minutes for helplines
Taxpayers are facing much longer waits for HM Revenue and Customs (HMRC) helplines, according to a new report. The spending watchdog found customers waited on average nearly 23 minutes to get ...