A solvent business should have the ability to pay its tax bills in full and on time. If it does not HMRC may consider that the business is potentially insolvent which could lead to accelerated recovery proceedings.
In such situations assistance should be sought as soon as possible to review the available solutions.
One such solution is a Time To Pay Arrangements or TTP which, if agreed, enables a business to make a revised payment over a scheduled period.
A TTP is at the discretion of HMRC to assist a viable business who cannot pay its tax as and when due.
The arrangements are based on the ability to pay, typically for a period of less than 12 months.
A payment schedule exceeding this period can be agreed but only in exceptional cases.
All TTP arrangements are subject to objective criteria and are on a case by case basis. There are also specific guidelines that must be met before a TTP is agreed:
- HMRC must be satisfied that the tax liability cannot be met on its due date
- The best realistic proposals for payment must be offered over as short a period as realistically possible
- The business must be able to pay both the amount offered under the arrangement and all other tax falling due during the arrangement period
- The arrangement must be based solely on the ability to pay. No other factors will be considered such as enhanced payments based on future investments
Whilst the option is available to contact HMRC via their Business payment Support Service, it is often advisable to seek professional advice. This can establish the ability to pay based on revised cash flow forecasts and a business improvement plan, showing the steps being taken to improve the tax position of the business.
The earlier you address problems faced paying HMRC the more likely a revised mutually acceptable payment schedule will be agreed.