Can I get more time to pay my company’s tax bill?
If your business cannot pay its tax bill when it’s due, it might be possible to negotiate an agreement with HMRC to pay what you owe over time. Known as an HMRC Time to Pay arrangement, it allows you to settle your outstanding VAT, PAYE and Corporation Tax debts in instalments over a typical period of three to six months, although you can get up to 12 months.
If your business is in a sticky financial position, making a Time to Pay (TTP) arrangement with HMRC can be very useful. It enables you to free up cash flow and reduces the risk of penalties, surcharges and HMRC enforcement action.
Here we discuss what a Time to Pay arrangement is, how you can negotiate one with HMRC and what happens if your repayment proposal is rejected.
How do I negotiate an HMRC Time to Pay arrangement?
How do I negotiate an HMRC Time to Pay arrangement?
If you have outstanding tax arrears or have received a tax bill you cannot pay in full, you should contact HMRC to discuss the possibility of making a Time to Pay arrangement. You can set up a TTP arrangement online using the information on this page or by contacting HMRC using the appropriate telephone helpline:
- VAT payments – 0300 200 3831
- PAYE payments – 0300 200 3810
- Corporation Tax – 0300 200 3845
HMRC will want to know why you cannot pay your tax bill and how much you can realistically afford in monthly instalments. It’s important to be realistic here as HMRC will not agree to a TTP if it does not think you can manage the repayments.
When making your repayment offer, consider that you must pay your future tax bills when they arise alongside your arrears. HMRC will usually ask you to put your repayment proposal in writing and provide copies of your cash flow forecast.
Will HMRC accept my TTP arrangement?
When deciding whether to accept your Time to Pay proposal, HMRC will assess the long-term viability of your business. It will want to be confident that your company can fully recover and keep up with the payments while clearing the debt in the shortest possible timeframe. HMRC will also consider your compliance history and what you have done to pay your arrears and get your tax affairs in order.
It’s worth mentioning that every TTP arrangement is different. Your agreement will be specific to the company’s circumstances and what it can realistically afford to pay without jeopardising its future. There’s also some flexibility in the arrangement, and it may be possible to shorten or extend it if your circumstances change.
What happens if HMRC refuses my Time to Pay arrangement?
What happens if HMRC refuses my Time to Pay arrangement?
If HMRC does not accept your TTP proposals, contact Scotland Liquidators to explore your options. We have significant experience making TTP arrangements for our clients and know exactly what the tax authority is looking for during the negotiations. However, there are also other options we can explore depending on your specific circumstances.
- Alternative funding – If you’re suffering from a temporary cash flow shortfall, alternative funding methods such as invoice finance or a merchant cash advance could provide the liquidity to settle your tax arrears.
- Company Voluntary Arrangement (CVA) – If your company is insolvent and has multiple creditors, a Company Voluntary Arrangement is a formal insolvency procedure that allows you to pay your debts over three to five years. It can also include your tax debts, even if you’ve been refused a TTP.
- Company Administration – If HMRC believes your company is insolvent, it may choose to commence winding up proceedings against you. In that case, Company Administration can provide a legal ringfence around the company while an administrator works to restructure it and return it to possibility.
- Creditors’ Voluntary Liquidation (CVL) – Despite your best efforts, your business may have no realistic prospect of a recovery. In that case, a Creditors’ Voluntary Liquidation enables you to close it in an orderly way and any debts it cannot pay are written off.
Need advice?
Need advice?
If you have outstanding tax arrears or have received payment demands from HMRC, we can help. At Scotland Liquidators, we can assess your position, propose an HMRC Time to Pay arrangement on your behalf and advise you on the other options that might be available. Get in touch for a free, same-day consultation or arrange a meeting at one of our offices in Scotland.
