Time To Pay

A Time To Pay (TTP) arrangement is an agreement between a company and HMRC to change how tax payments are made. Instead of paying when due, if a company knows they will have problems paying their tax on time, a TTP can help alleviate strain and provide a means to pay HMRC in instalments.

While it sounds like an idea any business would want to use, the TTP is something that HMRC will only let businesses use under specific circumstances. Understanding why a TTP may be useful for your business, and what HMRC wants in return for a successful application are crucial.

If you would like to know whether a Time To Pay Arrangement is right for you, talk to Hillcrest Finance today.

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:

  • VAT
  • Corporation Tax
  • PAYE

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.

Advantages of a Time To Pay Arrangement

TTPs are beneficial when:

  • You know you can pay debts if given time
  • You’re looking for means to restore cash flow
  • You want to avoid insolvency
  • You don’t want HMRC to take legal action
  • You want to avoid HMRC penalties from lay payment

Disadvantages of a Time To Pay Arrangement

A TTPP may not act in your favour when:

  • Your business will really struggle to pay on time
  • Your business is within an industry HMRC would deem risky
  • Your business is known to pay late frequently

How long do Time To Pay Arrangements last?

HMRC will want you to pay back your debts as quickly as possible but will take all finances into account on your TTP application. The majority of arrangements provide a 3 to 6 month repayment window. If it is found that a business will struggle to improve cash flow that quickly, an arrangement can last up to 12 months, but you should never expect it to run beyond that.

Can HMRC pull the plug on a TTP?

You may think that negotiating time to pay with HMRC is the hardest part of a TTP, but it is actually ensuring that your business retains clear and open communication. If there are any financial changes, for better or worse, HMRC must be informed.

For example, if a business receives a large cash flow injection, they must tell HMRC, who will likely change the TTP. And if a business were to struggle further, they would need to tell HMRC to help avoid withdrawal, as the business would no longer meet the terms of the arrangement.

How do I get started with a Time To Play Application?

To get started, talk to the team at Hillcrest Finance. We specialise in helping companies across the UK with these types of applications, especially when it involves getting all your ducks in a row for HMRC

If you have any questions about TTPs or are wondering if alternative solutions are available for your business, call our team on 0141 478 0862 today.

Get in touch with us about TTP today