Not being able to meet your monthly repayments is a strain on any small business owner or director. 

You want to pay everybody on time but sometimes it’s a juggling act so you meet one intending to catch up next month but this might prove impossible and before you know it, you’re finding it difficult to manage these arrears too. 

This can cause problems for directors at any stage and if the creditor happens to be HMRC then this can be a real headache. 

Not only will there be interest and potential penalties for late or non-payment of VAT, corporation tax, PAYE or national insurance contributions (NICs) but HMRC are known for how seriously and relentlessly they look to seek repayment. 

If you don’t engage with HMRC then they will save you time and get in touch with you quite quickly. If you still don’t acknowledge the issue then you could easily be facing a winding up petition which could mean the end of your business. 

Fortunately there is a potential solution for business owners that could work and allow them to make repayments over a manageable period, reducing the financial burden and giving them vital breathing space to regain some ground. 

It’s called a time to pay arrangement (TTP) and could be the answer to your specific HMRC problems.

What is a Time to Pay Arrangement? 

How do HMRC work out debt repayments?

It’s important to remember that a TTP isn’t an automatic right and may not necessarily be granted. 

HMRC reviews each proposal carefully, asking key questions to ensure the proposed instalments are affordable, that they can trust the business and its directors and that the debt will be paid off as quickly as possible. 

The length of the arrangement depends on the amount owed and the business’s overall financial situation. Typically they will span between six and 24 months and are reviewed regularly to accommodate any changes in circumstances. 

During these reviews, HMRC may adjust the agreement: if the business’s financial position improves significantly, the duration may be shortened, or it may be extended if the financial situation worsens but the company remains in constant contact and shows potential for recovery.

What else should you consider?

Like many special financial agreements a TTP has both advantages and disadvantages. 

On the positive side, payments can be spread over a longer period, which supports business cash flow and allows for more accurate financial planning and forecasting which your accountants and HMRC will approve of. 

TTP provides space for viable companies with temporary financial difficulties to grow back into profitability and allow them to rebuild profit margins and cash reserves. 

A TTP arrangement will also halt any incoming legal actions from HMRC such as a winding up petition and will also avoid any additional penalties and surcharges being imposed. Depending on the situation and proposal, several HMRC arrears including corporation tax, VAT and PAYE can be included in one agreement. 

We know this sounds promising but there are also some potential drawbacks to consider before you rush to find out more. 

Firstly all repayments have to be made in full and on time. This cannot be stressed enough. 

If the business is already struggling to make existing debt payments to schedule then this could be a challenge, as could the industry a business works in. Seasonal businesses with ebbs and flow to their business cycle could find it difficult to meet a regular 12 month schedule. 

Interest on the arrears will continue to accrue and must be paid on top of the outstanding debt. If any repayments are missed or even stopped then HMRC can be expected to step in and end the arrangement.  

If this happens then it will not be renegotiated, it will end and repayment will be sought with no further relief being granted. 

Does this sound like a solution? 

Now anyone can apply for a Time to Pay Arrangement with HMRC themselves but there are obvious advantages to using an experienced professional. 

They will have handled TTP negotiations before and will also have expertise in tax regulations and negotiations themselves which could result in a more realistic and favourable repayment plan being accepted. 

If this offer sounds interesting then get in touch with us at your earliest convenience. We offer a free initial consultation for any director or business owner who wants to arrange one to discuss their issues further.. 

One of our team of expert advisors will assess your financial situation, and if acceptable will handle the complex and often stressful communication with HMRC, and reduce the risk of errors that could result in penalties or application rejection.

There may also be other solutions available to you but we’ll only be able to offer our recommendations after we speak with you in the first instance. 

Get in touch and together we can get to work to make things work better for you!