If you’re worried you can’t pay your tax bill then your best bet could be to set up a Time to Pay Arrangement.
As part of the response to Coronavirus, the government has extended its Time to Pay (TTP) Arrangement to help support businesses struggling to manage their tax liabilities. This arrangement covers all forms of taxes – but it existed long before the pandemic hit.
Setting up a Time to Pay Arrangement means you can spread the cost of your tax bill over monthly instalments. This is typically over a period of up to 12 months. This support has existed relatively under the radar for a long time, but much more emphasis has been placed on this support in recent months as businesses are finding making payments increasingly difficult.
We advise you to speak to HMRC as soon as you know you’re unable to pay
Feeling like you’re under threat of debt can feel horrible. So we’d always recommend picking up the phone proactively and speaking to HMRC before a payment becomes late. This arrangement is set up for exactly this reason, to prevent you from falling behind with your tax payments, and is especially necessary for many this year.
It is very important to note that you will be charged interest on the amount of tax still outstanding. That being said, this can really help you to manage cash flow in the coming months, without fear of penalties. HMRC’s interest rate is lower than most bank borrowing rates so the interest shouldn’t be too painful.
How to contact HMRC if you are unable to meet tax payment deadlines
It can be very easy in these times to fall behind on payments of Corporation Tax, VAT and PAYE especially if you have deferred earlier amounts such as your March 2020 VAT liability.
If you are thinking of making a TTP arrangement for any of the business taxes you will need to offer an affordable proposal over a specific time period. Ensure that HMRC are satisfied you will be unable to meet the tax due deadlines and your proposed repayments are over the shortest time possible.
In order to do this, have the following information handy when you contact HMRC:
- Your Unique Taxpayer Reference number;
- The amount of tax you need to pay
- How much you can reasonably afford to pay now and the amount you need to defer
- Your business bank account details
HMRC prefer you to contact them by telephone when negotiating at TTP arrangement as this is the most efficient way for them to gather the information they need to make their decision.
It’s also possible to spread the cost of your latest Self Assessment bill
If you are finding it difficult to pay your personal tax liabilities it is also possible to spread the cost of your latest Self Assessment bill with HMRC. To set up a payment plan with HMRC you will need to meet these criteria:
- Owe less that £30,000
- Have no other payment plans or debts with HMRC
- Be up to date with your tax return filings
- Make contact with HMRC less than 60 days after the payment deadline
If you meet all the conditions above you can set up a payment plan online, otherwise you will need to call the Self Assessment helpline for assistance.
As with business taxes HMRC will charge interest on any outstanding tax balance.
We’re still here to support you
If you have any questions about how this works, or you’re unsure how your personal circumstances fit into this service, we can help you figure it out. Something like a cashflow forecast can be really helpful if you want to be sure you can afford the agreed repayments. Don’t be afraid to ask – as we always say, there are no silly questions here.