• IE
Choose your location?
  • Global Global
  • Australian flag Australia
  • French flag France
  • German flag Germany
  • Irish flag Ireland
  • Italian flag Italy
  • Polish flag Poland
  • Qatar flag Qatar
  • Spanish flag Spain
  • UAE flag UAE
  • UK flag UK

Time to Pay agreements with HMRC

03 May 2024
Many businesses are struggling financially in the current economic climate and it can often be tax debts that are ignored in favour of paying suppliers and keeping the cash flow within the businesses moving. However, we are increasingly seeing HMRC taking action to issue notices and winding up petitions to companies owing tax. With those threats in mind, many businesses are taking action to negotiate "time to pay" arrangements with HMRC. 

HMRC has invested heavily in monitoring tax compliance. As a result, the numbers of enquiries, checks, investigations, and recovery of tax are on the rise. The number of winding up petitions instigated by HMRC is also increasing.

The practice of trading with Crown monies, is abhorred by HMRC and we are seeing HMRC pursue companies more aggressively where it believes that this practice has taken place; especially where taxes collected by businesses on behalf of HMRC have not been paid over in a timely manner.

The tax regime and general tax compliance has seen numerous changes over recent years, including HMRC taking a more assertive approach to collecting tax debt. This has included issuing statutory demands and winding up petitions.

If HMRC issues a winding up petition and the Court agrees that the winding up order should be made, the company will be liquidated without further challenge and the Official Receiver appointed to take control of the business and assets.

One way of avoiding a winding up petition for an HMRC debt is to engage with HMRC and come to a "time to pay" agreement for the debt owed, stabilising company cash flow.

A time to pay agreement is a payment plan that allows a business to pay outstanding tax debts over an agreed period. The agreement for payment is typically between six months and twenty four months, but on occasion can be a little longer. This is all dependant on the amount of tax due and the proposals sets out in the payment plan. Each agreement is tailored specifically to the taxpayer.

We have had considerable success helping clients where a business is facing financial difficulties with mounting tax debts to negotiate time to pay arrangements with HMRC. In most instances, HMRC do not want to see business fail and agreeing a time to pay arrangement with a business is more preferential than a business failing and paying no monies at all.

Any business in financial difficulty should take advice as soon as possible. We find that early contact and direct negotiation with HMRC results in the best negotiated time to pay agreement terms.

If you would like advice on an outstanding tax liability, please contact one of the Tax team or your usual DWF contact. 

Further Reading