Tax – ‘Time to Pay’ and other things you should know
Posted on 6th January 2023
With the January tax deadline approaching quickly, you might be concerned that you won’t be able to pay all of your personal or business tax.
If you are in this situation, you can contact HM Revenues and Customs (HMRC) about a ‘Time to Pay’ arrangement.
What is ‘Time to Pay’?
HMRC can agree a debt repayment plan for your outstanding taxes. If you are struggling to pay your corporation tax, VAT, PAYE, or self-assessment tax (SAT) you can ask HMRC for extra time to pay.
In many cases you will be able to make arrangements to pay what you owe over six to 12 months.
Will I qualify for a ‘Time to Pay’ arrangement?
If you are already in debt with HMRC or expect to have problems with your payments, you will have to apply to set up the arrangement. HMRC must be satisfied that you can meet the terms and repay all your taxes in full.
You will need to make proposals that show you can pay; however, you shouldn’t offer to pay back more than you can afford.
You will need to provide evidence that you can meet your payments, such as
sales forecasts
measures you are taking to reduce costs
commitment to pay your taxes.
If you make an arrangement with HMRC, payments will be taken by direct debit to make sure they aren’t late. You will be charged interest from the date your tax is due to the end of the Time to Pay arrangement. This will be included in overall debt covered by the arrangement.
What will HMRC take into account?
When deciding whether to make an arrangement with you, HMRC will consider a number of things, including whether:
you have previously filed your tax returns late or received fines
your business is in a high-risk sector which is very competitive or prone to cashflow problems
your business has been severely affected by the coronavirus measures or other extreme market conditions.
Deferred payments
If you have reduced your self-assessment tax payments on account due in January and July last year it’s important to make sure that you will have enough to pay anything that's due on 31 January this year.
While you won’t be charged interest or penalties on deferred payments the amount will be due in full.
Take professional advice before applying to HMRC
If HMRC doesn’t accept your application you will need to find another way to meet your obligations, through a financing arrangement, for example.
To avoid this happening, you can ask for the help of a professional to carry out a review of your financial position, to provide a statement of your affairs, and to produce a realistic financial forecast. If you wish, they can speak to HMRC on your behalf.
HMRC has a Payment Support Service if you cannot pay yout tax in full before your payment deadline, including advice on tax and benefits. The helpline number is 0300 200 3835 (Monday to Friday: 8am to 6pm). You can also use the HMRC app or access information via your Government Gateway account.
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