What is a Time To Pay arrangement?
A TTP is an arrangement made between your company and HMRC which lays out a short-term tax payment plan. When most people think of creditors, they think of individuals and other businesses which lend money. You may be surprised to learn that HMRC is one of the biggest business creditors in the UK, and when they want taxes paid, they expect it on time.
That’s where TTPs come in. These arrangements are made for companies which are having genuine trouble paying their taxes. The idea behind TTPs is that companies which are having cash flow problems are given a little breathing room to pay back taxes. It is typically reserved for companies which would be deemed as valuable/have a future and are simply at a bump in the road.
What taxes does a Time To Pay arrangement cover?
Time To Pay will commonly help cover:
It should be known though that HMRC also clearly states that “[it] can cover all outstanding amounts overdue including penalties and interest.” This is very important, as every business will incur different charges that can be hard to handle.
How much does a company pay in their Time To Pay arrangement?
Every TTP is different, as HMRC will want to address a myriad of information to come to an informed decision. The application process is often something businesses trip up on by not being clear or providing misinformation which HMRC will not act favourably on.
That’s why it is important to talk to Hillcrest Finance and get help with any TTP application.
Can’t my business just pay taxes later when cash flow improves?
You could, but HMRC will not like you doing so. Any late payments are seen as a red flag that your business has problems. For example, consistent late payments or a failure to pay could be seen as a sign a business is about to declare Corporate Insolvency; something most directors will want to avoid.
HMRC appreciates when a business takes a proactive approach to debt management. If you’d like more information on how to handle cash flow and debt, Hillcrest Finance can provide business advice for your situation.
Building your case
A business can’t simply call HMRC and ask for some leeway. HMRC will want to know exactly why a business is having difficulty and how cash flow is currently performing. You will have to provide evidence as a case which shows your issues and what your business has done to try and avoid this situation.
Building your case if something Hillcrest Finance’s advisors can help with as you’ll need to be precise. For example, if HMRC were to ask if you could easily pay taxes in a short period, they may deny the plan and ask for such. It can be a daunting proposition for most businesses, but planning ahead and knowing exactly the right information to provide will help your case.