Is your business struggling to pay the tax bill?
Don’t worry – you may be able to arrange a payment schedule with HMRC to allow you to pay your tax over a lengthier period. This is known as a Time to Pay (TTP) Arrangement.
What’s an HMRC Time to Pay Arrangement?
Time to Pay Arrangements were launched in 2008 to improve the way businesses manage their HMRC tax.
Essentially, a TTP Arrangement is an agreement between you and HMRC that your tax is paid in instalments over a fixed time frame instead of in one lump sum.
All taxes are subject to the Time to Pay Arrangement. However, TTP is usually used for VAT, PAYE, and Corporation Tax in relation to businesses.
Your liabilities are stretched over six to 12 months, but if necessary, you can request a lengthier period. Paying in instalments can make it easier to make vital payments – like rent and salary – and boost cash flow.
A TTP Arrangement also proves to HMRC that you are conscientious about clearing your tax bill on time. As a result, they’re less likely to begin action against your business.
If your company is experiencing a short-term cash flow issue, then a Time to Pay Arrangement is suitable.
On the other hand, if your business has ongoing, more extensive HMRC tax issues, TTP isn’t the answer.
HMRC Time to Pay Arrangement: step-by-step guide
Step 1: Once you’ve drafted a repayment request, it’s submitted to HMRC with details about your situation and when you can realistically pay.
Step 2: If you’re considering a TTP Arrangement, it’s a good idea to reach out to a team of chartered accountants such as Accountants East London. This will allow you to create an accurate, professional proposal.
Step 3: HMRC will request that your firm attends its tax bureau to put together an organised payment strategy. Before the meeting, HMRC has to be assured that you’ll follow the recommended payment plan.
Step 4: You must explain the interims at which your company will settle up and the amount you owe. This should be supported with evidence detailing why they’re suitable.
Step 5: As soon as this is agreed upon, the TTP Arrangement will proceed over an agreed time frame, finishing when all tax debts and settlements are reimbursed.
What happens if my Time to Pay Arrangement proposal is declined?
HMRC may decline a proposal if they don’t believe you’ll repay or consider you can pay the sum in one instalment.
We recommend seeking assistance from a reputable accountant to help you draft a Statement of Affairs, in addition to other forms to support your claims.
Should the proposal have already been declined, you may have to think about a Company Voluntary Arrangement.
However, there are other choices on hand that a qualified accountant can guide you on.
What happens if I miss a TTP instalment?
Missing an instalment of your Time to Pay Arrangement is not ideal as HMRC may prosecute your firm for failing to stick to the arranged payment strategy.
Concerned about failing to make any payments? We recommend reaching out to a professional straight away to avoid severe consequences.
Need help with a Time to Pay Arrangement? Contact Us
If you need advice or support with a Time to Pay Arrangement, contact Accountants East London today.