Introduction
- The Approach to this and all Articles is consistent with our Standard System and Procedure.
- The above named Article gives “an overview” of the purpose to which the “substantive contents” of which are given below.
- A Time to Pay arrangement (TTP) is an agreement with HM Revenue & Customs (HMRC) to spread a tax liability over a longer period to help ease cash flow.
- There are items for which there is a system and procedure to arrange time to pay. These are as follows:
- Corporate Tax.
- Personal and Business Tax i.e. Sole Traders and Self Assessment Tax liability.
- Value Added Tax (VAT).
- Pay As You Earn (PAYE).
- Note that to setup an arrangement online, you must be registered for an online Personal or Business Tax account.
- This article sets out the process.
Corporation Tax
- The due date for payment of corporation tax is generally, 9 months and 1 day after the financial period end.
- With the exception of newly formed companies, for the first year only. Avar will keep you advised accordingly and only if applicable to your situation.
- These arrangements can only be made by you, as an officer of the Company, as you have security access clearance and authority to arrange time to pay.
- This arrangement cannot be done online and can only be done over the phone, on 0300 200 3410.
- You will need the following information when speaking to HM Revenue and Customs:
- Company Name.
- 10 digit Unique Tax Reference (UTR).
Personal Tax (SATR)
- You can set up a Self Assessment payment plan online if:
- the latest Self Assessment Tax Returns has been filed (follow this link)
- You will need to have or setup your Personal Tax Account details to login (follow this link).
- you owe less than £30,000.
- you are within 60 days of the payment deadline.
- you plan to pay your debt off within the next 12 months.
- you do not have any other payment plans or debts with HM Revenue and Customs.
- the latest Self Assessment Tax Returns has been filed (follow this link)
- If you are unable to fulfil the above criteria, this must be done over the phone, on 0300 200 3410, quoting your Personal Unique Tax Reference (UTR). You are advised to telephone at the earliest time of day, generally 8:00, as this reduces waiting times.
Value Added Tax (VAT)
- VAT-registered businesses that owe less than £20,000 of VAT can set up a payment plan online.
- A VAT-registered business can set up its VAT payment plan online (requires login credentials) if it:
- has filed its latest VAT return.
- owes £20,000 or less.
- is within 28 days of the payment deadline.
- does not have any other payment plans or debts with HMRC.
- plans to pay off its debt within the next six months.
- Some businesses are not eligible to use the online service.
- This includes businesses that use the VAT cash accounting or annual accounting schemes.
- Businesses that make VAT payments on account also cannot set up a payment plan online.
Pay As You Earn (PAYE)
- You can set up an employers’ PAYE payment plan online if you:
- have missed the deadline to pay an employer PAYE bill.
- owe £50,000 or less.
- plan to pay your debt off within the next 12 months.
- have debts that are 5 years old or less.
- do not have any other payment plans or debts with HMRC.
- have sent any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due.
Key Features
- In the past, we as agents, have been able to speak to HMRC and debt collection agencies on behalf of our clients, however, HM Revenue & Customs no longer allow agents to perform this service.
- You must contact HMRC directly to arrange a Time to Pay arrangement since they ask confidential information that Avar do not hold nor will we be willing to divulge on your behalf.
- You must make the first move to avoid any potential surcharges and should make contact with HMRC before the tax is due.
- Interest will still be charged.
- You will be contacted by the Debt Collection Agencies (working for HMRC) to recover the tax due, if no arrangements are in place.
- A time to pay agreement can vary over one year, depending on the amount of tax due and your ability to pay, based on your dialogue with HM Revenue & Customs.
- From experience, our clients have been known to agree up to 12 months to pay.
- It is important that all payments agreed under TTP are paid in full on the dates agreed.
- Otherwise HMRC are within their rights to cancel the arrangement and demand full payment of the balance outstanding and issue penalties.
- TTP arrangements fall within the scope of HMRC’s discretion provided the following principles are followed:
- Objective criteria are applied in each case.
- TTP arrangements are entered into on a case-by-case basis.
- TTP is only agreed where HMRC is satisfied that you cannot pay their liability on the actual due date(s).
- For business tax liabilities, HMRC will also assess, during the call, the long term viability of the company as a going concern and may look for alternative options.
- You will need to offer the best payment proposal that is realistically affordable.
- If your ability to pay improves during the TTP period, then you must contact HMRC and increase the payments/clear the debt.
- TTP is only agreed where HMRC believes that you will have the means to pay the taxes included in the TTP arrangement and any other taxes outside the arrangement, which become due during the TTP period.