Why a Time To Pay arrangement could be your way through

If you’re a director or owner of a small business and worry about how you’re going to be able to keep up with your tax payments when they fall due then you need to know that you’re not alone. 

Many businesses face temporary financial difficulties when they’re trying to balance their payments and the pressure can sometimes be overwhelming – especially if you owe HMRC.

The good news is that there is a specific repayment option that might be available to you that could provide you with the breathing space necessary to let you make the necessary changes you need to feel you’re back on solid footing. 

It’s called a Time to Pay arrangement (TTP) and we’ll look at it in more detail and how you could access it. 

What is a Time To Pay arrangement? 

In its easiest to follow terms, a TTP is a formal agreement granted by HMRC that allows a business to repay VAT, Corporation Tax or National Insurance Contribution arrears over a longer, more manageable period typically between six and 24 months. 

This isn’t a sign of failure or weakness in a business – it’s actually strength and a smart decision to navigate temporary difficulties to get back to profitability more quickly.

How can a Time To Pay arrangement help your firm?

  • Improves cash flow: By spreading tax payments over a longer period, you can free up cash for other essential business expenses. This can help you better service debts, plan finances and avoid running up any other arrears.
  • Halt legal action: If you’re facing the threat of legal action from HMRC such as a winding-up petition then a TTP arrangement can stop it. This will allow you to concentrate on running your business and repaying the arrears instead of arguing that you should be allowed to in court. 
  • Avoid excess penalties: If a TTP is agreed with HMRC then they will not impose any additional penalties or interest charges on the amount owed – which can save the company a significant amount of money.

How to apply for a Time To Pay Arrangement?

A TTP is not a magic wand nor an automatic acceptance. HMRC will need to be convinced that the business can afford to make repayments and must not have defaulted on any previous payments. 

While anybody can apply to HMRC for a TTP, directors working with a licensed insolvency practitioner will enjoy an advantage. They will have worked with HMRC before and will be able to gauge the likelihood that the arrangement will be accepted before application saving time, stress and worry.  

They will also be able to work with directors to provide a clear and realistic repayment plan that shows how they’ll be able to meet their obligations and meet any other questions HMRC will be sure to ask. 

Interested?

If the issues outlined sound familiar and you think a TTP could be useful to you and your business then get in touch with us. 

We offer a free initial consultation for any director or business owner who wants to arrange one to discuss their issues and goals further.

One of our team of experienced advisors will assess your financial situation and can help handle the complex communication with HMRC and reduce the risk of errors that could result in penalties or the application being rejected.

Depending on the circumstances that the business finds itself in then there may be other solutions available such as administration, a CVA or even liquidation but we (and you) will know more after we have that first conversation at a time that’s right for you.