In our final instalment of our popular recap series we cover Time to Pay arrangements. 

What are they? What will they do for your business and what’s the best way of persuading HMRC to grant you one?

We answer these and other frequently asked questions about this little known but potentially business-saving agreement.

Why else would you choose to pursue a Time To Pay arrangement apart from existing arrears?

  • Temporary cash flow problems – If your business is experiencing a short-term cash flow issue but is otherwise viable then a TTP could provide valuable breathing space
  • Unexpected expenses – every company sometimes has unforeseen bills and charges that have to be paid and if they make it difficult to meet obligations then a TTP can help spread the costs manageably 
  • Seasonal fluctuations – if your business experiences seasonal fluctuations in income then a TTP could help manage incoming liabilities during these leaner periods
  • Avoiding insolvency – if the business keeps to the agreed payment schedule then HMRC won’t look to initiate legal actions such as obtaining a County Court Judgement (CCJ) or look to bring a winding up petition to close the business
  • Continue trading – the company can continue to operate freely while the arrangement is in place, generating profit and preserving jobs. A TTP agreement is also private between HMRC and the business so is not advertised anywhere.

What does a Time to Pay Arrangement contain?

Each agreement is judged by HMRC on its own merits but there are some common elements that each one contains:-

  • Duration is usually six months or less although in rare and exceptional circumstances, HMRC have allowed them up to 24 months. Any overdue tax debts alongside any current debts are expected to be repaid within any agreed timeframe.
  • Interest will still be paid on any owed arrears but any penalties or surcharges HMRC would usually levy for late payments will not be applied.
  • Any business can apply for a TTP with HMRC being the sole arbiter on whether they will accept, reject or negotiate an offer depending on their own internal criteria.

What is the difference between a Time to Pay arrangement and a Creditors Voluntary Arrangement? 

Time to Pay Arrangement Creditors Voluntary Arrangement 
Who it involves A TTP is an agreement between a company and HMRC. A CVA is an agreement between a company and its creditors. 
Purpose A TTP is used as a way to pay outstanding tax such as VAT, PAYE or corporation tax arrears.A CVA is a plan for repaying a company’s debts when it’s insolvent.
Repayment terms A TTP usually lasts 6 months or less. However in rare circumstances it can last up to 24 months. A CVA, is more long term, usually lasting 60 months or over depending on the unique circumstances. 
Legal Action A TTP is a non-legally binding contract, however it is enforceable by tax authority. A CVA is a legally binding agreement between a company and its creditors. 

If you feel like your business would benefit from a TTP arrangement then the best thing to do would be to get in touch with us to arrange a free consultation about your situation. 

We’ll be able to advise you on your potential chances of being accepted and if you decided that you want to proceed, we’d be able to work with you on presenting HMRC with the best possible case.

Getting professional advice early will help any case as it shows you are serious and realistic about tackling any arrears.