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If you (personally) or your company are unable to pay a tax liability, on or before the due date, (personally – 31 January and/or 31 July or company – 9 months after the financial year end), you may be able to enter into a “time to pay arrangement” with HM Revenue & Customs.
This may also apply to other taxes such as VAT and PAYE.
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.
Time to Pay (TTP) Arrangement
A Time to Pay arrangement (TTP) is an agreement with HMRC to spread a tax liability over a longer period to help ease cash flow.
If you need to agree a Time to Pay arrangement (TTP) for a tax liability, speak to Avar first for the up to date shared experience of the many.
This service is free of charge.
First, the actual Tax Returns must be filed with HM Revenue & Customs.
It is only after filing that they are likely to enter into a dialogue.
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.
HM Revenue & Customs telephone number is 0300 200 3835.
You will need either your UTR or National Insurance Number to hand when speaking with them.
A time to pay agreement can vary over weeks or months, 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. This will however depend on your dialogue with HMRC.
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.
Principles of TTP
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.
The TTP period is as short as possible.
Will HMRC Always Agree a TTP Arrangement?
When determining whether to accept a TTP arrangement, you must be able to provide the following information when presenting your case:
Sales and cash flow forecasts for the next 6 to 12 months.
How you will reduce overheads and expenses to ease cash flow to meet the tax liability.
Statement of intent that you will repay the liability.
The same principles are applied to all taxpayers, although the detail of processes can be tailored to reflect the risk/return associated with different liabilities.
As a rule, the larger the liability the greater the risk and the greater the need for more information.
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