Time To Pay

1. What is Time To Pay (TTP)?
For a variety of reasons, a taxpayer may find themselves in a position where they can’t pay a tax bill when it falls due.

Time To Pay (TTP) arrangements allow HMRC to collect tax in a cost effective way and is open to ‘viable customers’ who cannot pay their tax on the actual due date. TTP allows viable customers who cannot pay on the due date to make payment(s) over a period that they can afford. Arrangements are tailored to the ability of the customer to pay and are typically for a maximum of six months although they can be longer. Most arrangements involve regular monthly payments being made but in exceptional cases may involve a short period of deferral.

The majority of taxes and duties payable to HMRC can be included in a TTP arrangement, such as income tax, corporation tax, value added tax and payroll taxes.

2. Am I a ‘viable customer’?
TTP arrangements must be approved by HMRC and are entered into on a case by case basis. TTP arrangements are only available to taxpayers who cannot pay their liability on the actual due date(s). HMRC will need to be satisfied that the taxpayer will have the means to pay the taxes included in the TTP arrangement and the onus is on the taxpayer to propose a payment plan which is realistic and acceptable for all parties. TTP arrangements can be entered into by both business and personal taxpayers.

3. When should I contact HMRC?
It is strongly recommended that where a taxpayer believes that they may have difficulty meeting future tax liabilities they take action early. This will increase the chance of the TTP application being successful and where a TTP arrangement is in place before a tax liability becomes due for payment, it will avoid surcharges and penalties that would otherwise be incurred.

Personal taxpayers who are in the process of completing their 2012/13 self-assessment tax returns and who believe that they will not be able to settle their tax due by 31 January 2014, should consider taking action immediately.

4. Will it cost me more?
The TTP arrangement does not prevent the application of interest (currently 3%) ,which will always be charged by HMRC on any overdue tax liabilities. However, in the absence of a TTP arrangement agreed before a liability is due, the penalty charged by HMRC will depend upon when the liability is settled, as follows:

Length of delay Penalty you will have to pay
30 days late 5% of the tax you owe at that date
6 months late 5% of the tax you owe at that date. This is as well as the 5% above.
12 months late 5% of the tax unpaid at that date. This is as well as the two 5% penalties above.

Agreeing a TTP before the payment is due will avoid these penalties.

5. How can Moore Stephens help?
As pressure mounts on HMRC to maximise tax receipts, the tax authority appears to be taking a tougher stance when agreeing TTP arrangements. Professional input can help to present a strong case. Furthermore, it may be possible to agree settlement of the tax liabilities over a longer period. HMRC has stated that TTPs lasting over a year are only agreed in ‘exceptional’ cases, however experience shows that it is possible to achieve a longer TTP period.

We have extensive experience of negotiating with HMRC, and have succeeded in agreeing TTP arrangements even where there has been one or more previous refusals. We are able to assist with your discussions with HMRC, as well as helping the preparation of robust financial information to present to HMRC. If you would like to discuss TTP arrangements, please contact our 24 hour tax investigations hotline on 0207 651 1400 or email taxinvestigations@moorestephens.com.


Dominic Arnold
Matthew Watkins

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