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Can my company get Time to Pay from HMRC for business debts?

Posted on: Wednesday 11th March, 2020

Can my company get Time to Pay from HMRC for business debts?

If you are awaiting payment from a late invoice or experiencing a shortage of cash, you may be able to renegotiate payment terms with HMRC, also known as a Time to Pay Arrangement. One of the first liabilities your business may fall foul of is missing mandatory payments to HMRC, including corporation tax, VAT, PAYE and National Insurance. Failure to pay the following can result in penalties and interest which can incur even more business debt for your company.

If you are a limited company director, you are legally obliged to submit the financial paperwork on time and make the compulsory contributions to HMRC. Failure to do so could raise red flags as being unable to pay essential bills is a sign of insolvency. If your business cannot afford basic liabilities and is struggling to raise money through sales, you may require advice from a licensed insolvency practitioner who can help rescue your business. If you decide to take the road of business closure as a result of insolvency, you may be entitled to redundancy pay which could facilitate the shutdown process.

Redundancy claims are a very professional company, Caroline who is dealing with our case is friendly, compassionate and very clear in explaining everything during this difficult time. The service we have received has been amazing, Thank you.
Tina Hill
Tina Hill

What is a Time to Pay Arrangement?

In order to ease the strain, HMRC may allow for a Time to Pay Arrangement (TTP) for your business. A Time to Pay Arrangement is a formal agreement approved by HMRC which allows you to spread your payment through affordable instalments, typically lasting a maximum of 12 months. By informing HMRC that you will not be able to make payment, you avoid the risk of being faced with penalties, but you will be required to pay interest.

Before you make contact with HMRC, take note of the following information:

  • Reference number (10-digit Unique Taxpayer Reference, also referred to as UTR, or VAT reference number)
  • Total amount of tax bill which you cannot pay
  • Reasons why you cannot make payment
  • Steps taken to raise money to pay your HMRC bill
  • Proposed total for immediate payment and time required to repay the remaining
  • Bank account details

HMRC will analyse the financial health of your business, including the risk of insolvency. They will take a mathematical view on the inflow and outflow of cash, including any additional income such as investments, savings and assets. You should also be able to demonstrate what steps you have taken to ensure that your business is able to make future payments.

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What will HMRC take into consideration for a TTP Arrangement?

If there is a true prospect of recovery for your business, but there is a genuine cause of concern that you will not be able to currently make payment, the TTP Arrangement will be considered by HMRC. If you fail to abide by the TTP Arrangement, the payment plan will be cancelled and HMRC will take immediate legal action against you.

If HMRC believes that you will not be able to recover your business and get back on track to make payments, a Time to Pay Arrangement will not be considered.

If your business is struggling to keep up with payments due to a lack of funds, your business may be insolvent. A licensed insolvency practitioner can help reform your business or close your business in a tax efficient manner. If your business faces liquidation or enters administration as a result of insolvency, you may be entitled to a redundancy claim, for which the average claim is £9,000 per director.

For more information on how we can help maximise your claim for redundancy pay, please contact one of our experts at Redundancy Claims UK. Our straightforward service enables us to establish your eligibility for redundancy payments quickly, free-of-charge and with no obligation. RCUK are Authorised and Regulated by the Financial Conduct Authority. Authorisation No 830522. You can check our registration here.

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