Time to Pay Support Guide
03 April 2020
Business and individual taxpayers can seek time to pay from HMRC if they cannot afford to pay their tax debts in full and on time. An agreement reached with HMRC for this is called a Time to Pay Agreement (TTPA).
In a time of national emergency, the Government has tasked HMRC to develop its TTP offering as an essential ‘lifeline’. The obvious and immediate financial impact for many taxpayers is cash flow. Who must we pay? Who will give us extra time to pay? HMRC is diverting resources to offer its Debt Management Services to a vastly great number of people and businesses affected by COVID-19.
To help support individuals and businesses in response to the COVID-19 health pandemic, the UK government announced extra resources to assist those struggling to pay their tax liabilities due to financial distress.
The tax helpline number is 0800 024 1222 - and is an addition to other HMRC phone contact numbers. Opening hours are Monday to Friday 8am to 4pm. The helpline will not be available on Bank Holidays.
Best practice for agreeing time to pay with HMRC
Below are some key practical points to bear in mind if you request a Time to Pay Arrangement (TTPA) with HMRC.
- Seek TTPA with HMRC in advance of payment deadlines
- Contact HMRC by phone in the first instance
- Explain the financial hardship
- Know your desired time frame for deferral and why affordable.
- Demonstrate you are managing costs
- Explain other debt financing and borrowings
- Prepare a cash flow forecast
- Show management accounts and cash reserves
- Explain the commercial rationale
- Prepare monthly income and expense statements
- Prepare a personal statement of assets and liabilities
- Make sure tax returns and accounts filed up to date
- Check if forward interest will be charged
- Check if any late payment penalties or surcharges will apply
- What about future tax liabilities?
- Remember that TTPAs are a deferral of payments. Tax liabilities are not written off.
- Up-front payments or periodic instalments by direct debit may be requested
- More than 12 months requires a higher level of evidence
- It may be contingent on future income or the sale of an asset
- Stick to the new deadlines under the TTPA. Set up a direct debit to HMRC.
- Renegotiation may be needed, especially given the unknown timeframe for the COVID-19 impact.