What is HMRC Time to Pay (TTP)?

In the ten years and more since the financial crisis of 2008-2009, HM Revenue & Customs (HMRC) have agreed many more late payment plans to help out individuals and companies who temporarily do not have the money needed to settle their forthcoming tax bills in full.

Self-employed individuals and directors can spread the cost of the taxes they owe as reported on their Self-Assessment forms over time up to 12 months. Businesses and limited companies can arrange payment plans for any soon-to-be-outstanding Corporation Tax, VAT, and PAYE liabilities they have incurred.

The scheme under which you and the taxman agree a payment plan is called “HMRC Time To Pay” (TTP).

In this article, Black And White Accounting shares with you:

What TTP is;
Who you ask for a TTP arrangement from;
COVID 19 and special Time To Pay Arrangement provisions;
Time To Pay Arrangements quick FAQs;
The Black & White Time To Pay Arrangement (TTP) assessment plan; and
How to get in touch with one of our accountants.

What is HMRC TTP?

TTP has existed in one form or another for decades.

The thinking behind the scheme is that it’s better to give you time and space to pay your tax bill than chase you through the courts if you cannot pay what you owe.

Any tax, duty, penalties or surcharges that you cannot afford to pay can be included in your HMRC TTP arrangement. A TTP arrangement can cover either personal taxes like Income Tax and National Insurance or business taxes like Corporation Tax, VAT, and PAYE.

With a TTP arrangement, HMRC allows you to pay back your debt to them over a period of up to a year. They collect a payment every month by direct debit from your bank account and, with each payment, the level of your debt to them is reduced.

Whatever you and the taxman agree to in your HMRC TTP arrangement, you must stick to it.

Make sure that you request a deal before the tax is due because, then, all penalties, surcharges, and interest you would be charged is then suspended. However, please make sure that you meet each monthly payment otherwise they will likely be reapplied to your account.

That said, agreements are not set in stone and the taxman can be very flexible.

If you meet each monthly direct debit on time and in full, you may be allowed to add further tax liabilities you don’t have the funds for onto your arrangement with them.

Be honest, open, and transparent with them and they will nearly always return the favour to you.

Do you request a TTP arrangement directly from HMRC?

Yes – you must contact HMRC directly to request a personal or company TTP plan – one type of plan is automatically granted and the other you have to call up and ask for.

Option 1 – no need to call HMRC

If you want more time to settle the personal taxes you owe as you reported on your Self-Assessment, you do not need to call and speak to an HMRC representative.

You can apply to set up an online payment plan by clicking here as long as you’re within 60 days of the payment deadline passing, you have no other HMRC debt, and you owe £30,000 or less.

You can, if you wish, use this system to make monthly payments against the tax you owe instead of the two annual payments you normally make under the “payment on account system”.

Option 2 – you need to call HMRC and explain your circumstances

If option 1 isn’t right for your personal or business circumstances or if you instead wish to make an arrangement to pay off other taxes like Corporation Tax, VAT, or PAYE over up to a year, you need to call HMRC’s helpline to apply.

When you contact HMRC, they will ask you a number of questions the answers to which will determine whether they’re prepared come to an agreement with you.

Before you call, prepare yourself for the following requests and questions:

they’ll need the reference number of the bill you’re currently not able to pay;
they’ll also ask you which other debt you have to HMRC and the time period in which those debts accrued which you currently cannot afford to pay and whether you wish to include them in your TTP agreement;
they’ll want to know why you cannot pay and what your current financial circumstances are;
they’ll ask how much you could pay now – for example, if you could pay a quarter of what you owe right now and then settle the rest over a period of up to a year;
they’ll want to know what efforts you’ve already put in place to try to find the money from other sources;
they’ll want reassurance that, in the future, your finances will change for the better and that you’re less likely to fall into arrears with them; and
they’ll be less likely to offer you a TTP agreement if they believe that you or your business is at risk of insolvency.

If they believe that you’ll be able to stick to your agreement with them, they’ll ask you to provide them with your bank account details so you can set up a Direct Debit for your arrangement.

When you negotiate with HMRC, start from the position that you’ll likely need a maximum period of time (a year) to pay back your arrears and ASK for it. Consider the outcome you want carefully because, if you ask for too short a length of time, you may be building up cash flow problems for you and/or your company in the near future.

The lower each monthly payment you make, the more you can afford each repayment so that’s why you should ask for as long as possible.

They will likely try to negotiate you into a tighter window of time as they want you to pay off your debt to them as quickly as possible.

Try your best to defend your position or, better still, get your accountant or tax agent to do it for you.

Coronavirus (COVID 19), the self employed, and HMRC TTP

As part of the government’s financial response to the Coronavirus (COVID 19) pandemic, it made an offer in March 2020 to taxpayers who complete Self-Assessment forms but whose sales and cash flow have suffered as a result of the crisis.

If your income and circumstances have been negatively affected by the Coronavirus outbreak, you can pay taxes due as reported on your Self-Assessment tax return in monthly instalments instead, so you didn’t have to find so much money in one go.

This offer originally included delayed (deferred) ‘payments on account’ that were due in July 2020 – you could now pay your tax returns in January 2021 although this deadline has now passed.

The Self-Assessment Payment helpline number is 0300 200 3822. It’s open Monday to Friday, 8am to 6pm.

In addition, taxpayers whose income was affected by the crisis and whose drop in income has meant that they cannot afford to pay debts and arrears owed to HMRC may also apply for the Self-Employment Income Support Scheme (SEISS) scheme. You can apply for the fourth financial grant under this scheme from April 2021. If you’ve been financially impacted by the pandemic and need assistance with your Self-Assessment payments, then the support of a local self-assessment accountant can provide valuable insights and help navigate the available options.

HMRC TTP Arrangements Quick FAQ

Will HMRC give me TTP?

HMRC are not obliged to agree a TTP arrangement with you but, in our experience, they are very willing to listen and help both personal and corporate taxpayers.

You’ll need to convince HMRC that you are not able to pay the money in any other way (including taking out debt) and that you will make the repayments on time.

How long do you have to pay HMRC?

Most HMRC TTP arrangements are made to last between 6 and 12 months. While HMRC are agreeable to a shorter time scale to pay them back, they rarely extend the time they give you to pay beyond a year.

How must I make TTP repayments?

HMRC will collect TTP payments from your account once a month by direct debit.

Can TTP be used by individuals or companies likely to be subject to insolvency proceedings?

If you or your company is insolvent or at risk of insolvency, you must disclose this during your call to HMRC. However, insolvency means that your request is likely to be rejected.

What happens if you can’t pay HMRC back with a TTP arrangement?

If HMRC are unable to take payment from your direct debit, they’ll first contact you to ask why TTP payment could not be collected.

If you’re unable to stick to the agreement, they cannot get in touch with you, or they feel that they can’t negotiate with you, the bill will become immediately payable in full.

You may then be subject to legal action like insolvency proceedings or country court proceedings.

Alternatively, a field officer may visit you at home or at your business’s premises.

When should PAYE be paid to HMRC?

If you cannot meet your PAYE bill on time, you need to contact HMRC to arrange extra time to pay as soon as you know.

Under normal circumstances, you need to make payment in full of your PAYE liabilities by the 22nd of the month (or 19th of the month if you complete paper-based forms).

Are late filing and payment penalties suspended with a TTP arrangement?

Late filing and payment penalties are generally suspended following the arrangement of a TTP arrangement.

However please be aware that these penalties may be reapplied if you break your arrangement with HMRC.

Is interest on overdue tax suspended if HMRC agree to give me longer to pay the tax owed to them?

Yes – interest is suspended when an agreement with HMRC is made however, as with late filing and payment penalties, they may reapply that interest to your account if you are unable to fulfil your financial obligations to HMRC.

The Black & White HMRC TTP Arrangement assessment plan

Have you found this page because you cannot make a payment you owe to HMRC within the time period allowed?

Please don’t panic about it – millions of requests are made for extra time to pay every year and you are not alone.

Despite the sometimes-fearsome reputation of HMRC, they are genuinely understanding, willing to help, and they are normally happy to extend the time you have to settle your bill on your initial phone call. Some say, they are the second most generous lender in the market, second only to the bank of mum and dad.

If you want to talk with one of our accountants about coming to a TTP arrangement with the taxman, please get in touch.

Is there a way you can avoid taking out an arrangement? Although there’s no actual evidence to suggest that you’re more likely to be turned down for time to pay but let’s try not to test the theory.

Ask us about our TTP assessment plan. Here, we’ll take the following steps to help you get your tax affairs and debt in order:

assess the situation – let’s look at how much the soon-to-be-outstanding tax bill is and the amount of cash you have available in your business bank account;
future income – which payments are you expecting from your clients between now and when the bill is due?;
what’s going out – what debts will your company have to clear between now and the due date of the tax bill? If you are in arrears to your suppliers, can we contact them to let them know that you’re going through temporary financial turbulence? You’ll be surprised just how many suppliers will help their clients when they’re in temporary need;
general cash flow issues – is the problem being caused by clients paying you too slowly and is it the case that they’ve been paying you particularly slowly of late? There may be a strong business case to avoid issues like this in the future by factoring your invoices out – we can help you arrange that. If factoring is an option, we may be able to raise some of the money owed on your tax bill within days; and
resolution – after we’ve fully understood your situation, we’ll share our assessment and advice with you about what the best options are. If you move your accounting provision over to us, we may be able to do some or all of the work involved for you on our agreed option.

Money management and accounting with Black and White Accounting

Running a company or a household isn’t easy, there’s always that little thing called “life”. With the economic disruption caused by COVID 19, meeting bills has been even tougher than usual for millions of Britons.

At Black And White Accounting, we’re proactive partners to our clients and, whenever you need us, we’re here with advice and support on all issues of personal and professional financial and money management.

If you want advice in confidence from an experienced accountant about the best way to go about getting an HMRC TTP arrangement and securing the maximum period of time to pay your tax, VAT, or PAYE arrears, we’d appreciate the opportunity to speak with you.

To find out more, please get in touch with us today, by contacting Black and White Chartered Certified Accountants, populating the “Got a Question” form on the right, or calling us on our helpline 0800 140 464 for confidential advice.

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