The changes to National Minimum Wage, employers’ National Insurance and business rates, combined with the current economic and political uncertainty, have all led to a fall in business confidence.
It is therefore inevitable that some businesses will face difficult financial challenges which may result in a build-up of creditor arrears, including liabilities due to HMRC.
For some businesses, a Time to Pay Arrangement (TTP) with HMRC may afford them some valuable breathing space to repay their debts.
What is a TTP Arrangement?
A TTP is a formal arrangement with HMRC whereby a company repays its debts due to HMRC over an agreed period.
Most involve regular monthly payments being made over 12 months of less. Some cases may involve a short period of deferral and in certain case-specific circumstances TTP arrangements can be longer than 12 months.
HMRC must think the business is fundamentally viable, and the company has the means to pay the taxes included in the arrangement, plus ongoing HMRC liabilities on the due dates.
TTP arrangements are looked at on a case-by-case basis by HMRC and there is no standard TTP.
Agreement will to an extent depend upon the view of the individual case officer assigned to the matter.
For smaller debts in respect of PAYE and VAT of £100,000 or less, a TTP can be set up online provided certain criteria are met.
What information is required by HMRC?
Directors must be honest and realistic when seeking a TTP from HMRC.
As a rule, the greater the HMRC debt, the more information HMRC will require.
We recommend that a company has up-to-date management accounts and forecasts prepared in advance of any discussions with HMRC.
For debts over £1million, HMRC will require detailed supporting evidence and will carry out a review and investigation as higher-level approval is needed.
What are the advantages of a TTP?
- TTPs provide a breathing space for viable companies that are experiencing financial issues
- They allow formal insolvency procedures to be averted, avoiding additional costs
- They allow surcharges and penalties to be avoided if the TTP is in place before a tax payment is payable
- If a formal TTP is agreed, it will give confidence that, provided the TTP is adhered and current liabilities are kept up to date, HMRC will not take enforcement action against the company.
However, if repayments are not met in full and on time, recovery action by HMRC is likely to be accelerated, so TTPs are not to be entered into lightly.
If you would like any further advice and support please call 01768 222030 or email help@armstrongwatson.co.uk
