What is HMRC's Time to Pay Arrangement?
HMRC's Time to Pay (TTP) arrangement is a flexible payment plan designed to help individuals and businesses struggling to pay their tax liabilities. It allows taxpayers to spread their tax payments over an agreed period, easing financial pressure and helping them stay compliant.
Key Features of the TTP Arrangement
Who Can Apply?
Businesses and individuals with outstanding tax liabilities who are unable to pay on time due to financial difficulties.
Applicable to various taxes, including Income Tax, VAT, Corporation Tax, and PAYE.
Those who have a good compliance history are more likely to be approved.
How It Works
Taxpayers contact HMRC to propose a payment plan before the tax becomes overdue or immediately after receiving a demand for payment.
HMRC reviews the taxpayer's financial situation, including income, expenses, assets, and liabilities.
An arrangement is agreed upon, typically requiring direct debit payments over a period (often up to 12 months).
Eligibility
Taxpayers must demonstrate genuine financial hardship.
There’s no strict minimum or maximum debt threshold, but for debts over £30,000 or plans lasting more than 12 months, additional scrutiny is likely.
Advantages
Prevents additional penalties and enforcement actions like bailiff visits or winding-up orders.
Protects the taxpayer’s credit rating compared to defaulting without a formal agreement.
Offers tailored solutions based on the taxpayer's ability to pay.
Disadvantages
Interest is charged on the outstanding balance.
If payments are missed, HMRC may cancel the arrangement and pursue full recovery of the debt.
How to Apply
Prepare Before Contacting HMRC
Gather detailed financial information, including income, expenses, debts, and assets.
Be ready to explain why you cannot pay on time and propose a realistic payment plan.
Contact HMRC
Call the Payment Support Service (0300 200 3835) or use HMRC’s online service for self-assessment customers.
You can also set up a Time to Pay arrangement online for Self-Assessment tax bills under £30,000 through the HMRC website: Set up a Self-Assessment payment plan
The service is open from Monday to Friday, 8 am to 6 pm.
Negotiate
Be transparent about your financial situation and provide evidence if required.
HMRC might counter-propose shorter payment terms or higher monthly payments.
Keep to the Agreement
Ensure all payments are made on time to avoid cancellation of the arrangement.
Common Scenarios for TTP
Small Businesses Facing Cash Flow Issues
Seasonal businesses often rely on TTP to manage cash flow during off-peak seasons.
New businesses struggling to establish steady revenue streams may use TTP to avoid penalties.
Individuals with Unexpected Bills
Self-employed taxpayers who underestimate their Income Tax bill may apply for TTP to avoid sudden financial strain.
Tips for Successful Approval
Apply early—contact HMRC as soon as you foresee difficulties paying your tax bill.
Be realistic—only propose payment amounts you can afford.
Stay compliant—file all returns and meet future tax obligations while under the TTP arrangement.
Conclusion
HMRC’s Time to Pay arrangement can be a lifeline for taxpayers facing financial difficulty, but it's essential to approach it proactively and responsibly. By staying transparent, negotiating effectively, and adhering to agreed payment plans, taxpayers can manage their obligations while safeguarding their financial health.
For more details or to set up a payment plan, visit HMRC’s official page on difficulties paying.
