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Time to Pay

The Government have launched a raft of financial measures to support individuals and businesses alike during the current Coronavirus pandemic.  Many of the initiatives are unprecedented and are intended to keep the economy afloat during these difficult times, and also to help the millions of individuals who are directly impacted.  The government support packages are intended to help all self-employed people and businesses in financial distress, and also with outstanding tax payments that are due.  We have discussed many of these packages in our blog.  Here we are focusing on the HMRC’s Time to Pay Service

What is the Time to Pay Scheme?

The Time to pay scheme is intended to help businesses or individuals who are unable to pay their tax liabilities.  As part of the support package which was announced during the March 2020 budget, HMRC confirmed the extension of the existing Time to Pay scheme.  It is intended to give more businesses additional support in controlling their tax affairs.  The scheme gives businesses extra breathing space to pay their HMRC and tax liabilities.  This is essential to businesses who are experiencing additional financial distress as a direct result from the Coronavirus pandemic.

How do you apply for Time to Pay?

The arrangements are agreed on an individual case-by-case basis.  HMRC will consider each cases specific circumstances and liabilities.  HMRC have a dedicated helpline which has been set up to specifically deal with COVID-19 Time to Pay.  You can contact them on 0800 024 1222 or go to the Coronavirus (COVID-19) support page at gov.org.

What will HMRC include?

Once you contact HMRC they will discuss the following with you:

  • Suspending debt collection proceedings that are already in place, or imminent.
  • Discussion and potential agreement to an instalment or payment arrangement
  • Potential cancellation of penalties and interest where you have had difficulties contacting or paying HMRC

Factors to consider when applying

  • If you know you will experience problems paying your tax liabilities, you should contact HMRC as soon as you can.  The problem won’t go away.  You will need to contact them in advance of the payment date.  Aim to contact them at least 1-2 weeks before the payment due date
  • To improve your chances of agreement, make sure all of your tax returns are filed and up-to-date.  HMRC are more likely to agree to any potential payment arrangements if there are no returns outstanding.
  • HMRC may need some supporting information to support your application.  This may include cashflow forecasts, budgets and a statement of affairs detailing assets and liabilities.  This will support your request and give HMRC more information to make a decision
  • Be prepared to tell the Tax Office how much you can afford to pay each month.  You will need to pay a fixed amount each month and you must forecast and how much you can afford.  Don’t expect HMRC to tell you how much you should pay.  You will need to take ownership of this.  Do not commit to something you can’t afford or something that is unrealistic.  It is important that you are able to pay the agreed amounts and schedule of payments you propose.
  • Make sure you have an agreement in place before the payment deadline.  This will ensure you won’t pay any fines or accrue any interest
  • If you have a number of tax liabilities, you may need to prioritise which liability you will choose to enrol for time to pay.  As a guide, it can be harder to negotiate arrangements for VAT, PAYE and National Insurance Contributions than it can be for Income Tax or Corporation Tax.  You may therefore wish to prioritise the former liabilities first.

During the current lockdown we continue to provide expert advice on your Tax and VAT affairs.  We  undertake meetings on Zoom and Skype offering expert advice.  Call us on 0800 471 4546 to arrange an appointment.