How to Get More Time From HMRC to Pay Off Company Tax Debt

HMRC tax debts

HMRC expects that all business and company owners pay their taxes when due. However, under certain conditions, you can renegotiate the terms of payment with the HMRC.

The mandatory payments for businesses in the United Kingdom include PAYE, National Insurance, Corporation Tax, and VAT, and failure to pay any of these attracts more debt to a company through interests and penalties.

As a limited company owner, it is legally binding on you to submit financial documents to HMRC as failure to do so, or to not make mandatory payments, suggests that you are on the verge of insolvency.

When your business is unable to raise funds through sales, you may opt for insolvency to avoid accruing debts, and it is best to seek professional help from an insolvency professional.

However, if you are experiencing a plunge in business or awaiting a late invoice payment, and there is a chance of staying afloat, it is wise to make a ‘Time to Pay’ arrangement, which is a renegotiation of payment terms for outstanding debt with the HMRC.

How a Time to Pay arrangement (TTP) works

A Time to Pay arrangement is a formal agreement between a company owner and HMRC, which allows them to spread debt payments for a specified time, usually across 12 months. As such, debt payment becomes easier for the business owner.

Informing the HMRC that you will not be able to pay off your business taxes at once, absolves you from the penalties for refusal to pay. Therefore, the TTP has only the consequence of interest on the payment of your business debt. If you are looking to contact the HMRC for a TTP, you must consider the following:

• VAT Reference Number: This is also known as the UTR number and is a 10-digit number that is unique to every taxpayer.
• Details of your bank account
• The total amount of the unpaid business debt
• Reasons for your inability to pay the debt
• Measures you have taken to offset said debt
• The sum that you can pay immediately and the period that you will need to offset the remaining debt
• The TTP arrangement will need to be paid in addition to any new taxes that are accrued from the date of the TTP

HMRC uses the cash flow of your company or business, savings, assets and investments to mathematically determine the financial health of the business and the risks of insolvency.

Hence, it is vital to prove that you are taking measures to clear all business debts in a short term and make informed financial decisions to avoid insolvency.

HMRC considerations for a TTP

HMRC gives preference to business owners with businesses that have prospect of recovering and making debt payment.

The TTP arrangement is legally binding, and failure to abide by the dictates of this agreement will attract the penalties of cancellation of the plan and legal actions against your firm.

HMRC will not honour a proposal for a TTP arrangement if it believes that your business is at risk of insolvency or will not be able to offset its debts.

For such companies, an insolvency specialist can help to close your business in a task-efficient manner without incurring more debt or guide you to make informed decisions, to aid in the reformation of your business.

Adequate knowledge of the options that are available to you will help you to make informed decisions on your business and finances. Hence, to garner the most valuable information, you can contact our business experts and professionals for assistance.

Struggling to repay your HMRC debt?

Visit our HMRC & Taxes service page here.

If you have received a warning letter from HMRC it is vital you get in touch as soon as possible.

The more time we have to help you with the debt the more options you have.

We can give you advice on your best course of action to fix the problems. Call us on 0800 975 0380 or email [email protected]