HMRC Time to Pay Arrangement for VAT and PAYE

How Much Time Could I Get? This does depend on the circumstances.  HMRC will usually agree that you can pay it back over 6-12 months.  However, if you instruct a professional turnaround advisor, they can usually get longer, i.e., 2 years, as they have a working relationship with HMRC and will not put forward proposals by companies that would struggle to pay.So, if you can't pay Paye or VAT, then a Time to Pay Arrangement is an option.  Time-to-Pay arrangements are made directly with HMRC. Take a look at their Business Payment Support Service to make sure you're choosing the right path. What are the criteria? Companies in debt to HMRC must apply to set up a Time to Pay Arrangement. HMRC will only accept a proposal if it is satisfied that you'll stick to the arrangement and repay all your taxes in full.It is your job to convince HMRC to allow you to pay your taxes over time by putting forward a reasonable proposal.Your proposals should be supported by evidence that these payments can be met, including:Forecasting sales Examples of how you can cut costs elsewhere A convincing argument proving your determination to pay your taxesIt is very important not to offer to pay back more than you can afford. If you do, then HMRC may reject the proposal, putting you in a worse situation. It's best to consult a financial or turnaround advisor to assess affordability levels.If accepted, HMRC will give your company a period of time to pay your taxes. This is usually between 6–12 months, but in some cases it can be longer. How do I pay? Installments for time-to-pay arrangements are taken by direct debt.  This is to ensure a smoother process for both customers and HMRC, as it means payments cannot be late.  It is likely that HMRC will want the Direct Debit set up on the day of the call. How to qualify for the arrangement HMRC will consider many different criteria when choosing whether to approve a time-to-pay arrangement. These include:Compliance with tax rules and regulations. Actions such as filing taxes late and being fined suggest that your company is unreliable and so unlikely to meet the terms of your agreement. Your line of business/industry Some businesses and industries are higher risk due to competitiveness, past experience and cash flow issues. Past experience of Time to Pay Arrangements, If you have had a Time to Pay arrangement before, you will still be considered, but this may affect your application. VAT taxpayersIn 2024, HMRC changed the eligibility requirements for a VAT Time to Pay arrangement. So now more businesses are eligible to use them.You can set up a VAT payment plan online if you:Owe up to £50,000 Have a debt for an accounting period that started in 2023 or later Seek a maximum period of 12 months to pay off the debt. Do not have any other payment plans or debts with HMRC Are up to date on all your tax returnsYou cannot set up a VAT payment plan online if you use a cash accounting scheme, an annual accounting scheme, or make payments on account.If your company can't pay the corporation tax that is due from the previous year, this can also be included in a time-to-pay arrangement. This situation is more common for those that are contractors/consultants in industries such IT/Banking. If this is you, then call us on 0800 9700539 to talk to an advisor. Research and Development Tax Credits These can be taken into account when agreeing to a TTP, but they have to be finalised and agreed upon. Consequently, they aren't really a relevant negotiating tactic. What could let your company down? Poor compliance with the rules and regulations surrounding your tax affairs, i.e. fines and late filing of paperwork. HMRC will also take into consideration your line of business and their history of meeting TTP arrangements. It only makes sense really that they are going to be less likely to affectively "lend" to business that are deemed high-risk.If your company has had a time-to-pay deal (TTP) in the past, they will still consider you for another TTP. However, HMRC are looking to scale back their level of TTP scheme, as it does not look particularly fair to be raising taxes but not collecting actual tax owed. What if HMRC does not accept a time-to-pay deal you can afford? If you have tried on your own to establish a time-to-pay arrangement and it has been rejected, you should conduct a turnaround advisor immediately. They can conduct an audit of your financial situation, including a statement of affairs and a financial forecast.h3>Time to Pay ArrangementWe can help arrange a time to pay with HMRC. Call us on 0800 9700539 to find out more. Company Voluntary Arrangement Consider a company voluntary arrangement. This will take the pressure off straight away. This allows non tax debts to be partially written off. It also allows your company to cut costs, make redundancies and plan a turnaround.  HMRC will accept a CVA if the proposal is fair, and the company is viable.  See one of our case studies demonstrating this. The administration or pre pack administration. These very powerful techniques can help protect the business assets and sell them to a new company or third party. This will protect the company from aggressive legal action by HMRC. Other possible optionsA short-term VAT loan (but beware – this can just put off the real decision and many lenders will require a personal guarantee). Refinancing the company through a bank or factoring facility. Injecting personal funds (but only if the business is truly viable going forward).Your advisor will then approach HMRC on your behalf. Their evidence often carries more weight as they will not put forward unrealistic proposals.  In addition, advisors such as ourselves talk to HMRC all the time as part of their day job!If this offer of a time-to-pay arrangement is refused but the company is viable, your advisor may suggest proposing a company voluntary arrangement (CVA). This is a formal insolvency tool used to restructure businesses and debts and recover from cash flow issues.Sometimes the threat of insolvency, in the form of a CVA, can push HMRC to accept a time-to-pay agreement. This is because with a CVA the return will be over a 3–5 year period. Also, if the business did eventually become insolvent, HMRC may be left with nothing at all. Therefore, it is possible to persuade HMRC that a time-to-pay agreement is the best way to ensure it recovers all of the company's outstanding taxes within a reasonable time frame.

What happens if we can't pay our VAT bill to HMRC on time? What can we do? There are a number of options that you can consider such as a debt management plan, time to pay arrangement or even a CVA if your business is viable but just behind on HMRC tax payments. Most importantly though you must act.