These options include:
- Suspending debt collection proceedings
- Cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately
- Agreeing an instalment arrangement (referred to as a Time to Pay arrangement).
Time to Pay Arrangements
Time to Pay arrangements give HMRC the authority to allow for viable taxpayers to make instalment payments over a period that they can afford. Typically these are over a period of 12 months, however in exceptional cases we have seen instances of this being extended to as long as 24 months.
Each arrangement is determined on a case by case basis. The application is within HMRC’s discretion provided certain principles are followed, such as:
- They are only agreed where HMRC believes that the taxpayer will have the means to pay the instalments and any other taxes due outside the arrangement
- The arrangement is as short as possible
- Under no circumstances can HMRC reduce the tax due
- Any repayments of tax due to the taxpayer elsewhere must be used to offset the debt
- Applicable interest will always will be charged.
The Chancellor has suggested that HMRC will take a pragmatic approach in light of the difficult economic climate and further guidance is being made available daily.
How to apply
In these circumstances, the first step should be to call the COVID-19 helpline (0800 0159 559) with the following information to hand:
- Your reference number (for example, your 10-digit Unique Taxpayer Reference or VAT reference number)
- The amount of the tax bill
- What steps have been taken to try and settle the bill
- How much you can pay immediately and how long you may need to pay the rest
- Your bank account details.
HMRC will go through this information and ask other queries regarding your income and assets and make a decision on whether a TTP arrangement would be appropriate. If so, a Direct Debit plan will be made to pay in instalments on the dates agreed.
This article was last updated on 22 March 2020
Talk to an expert
It is expected many companies will be going through this process in the coming weeks. If you require any support in understanding the process or putting together the supporting information required to make the application, please get in touch.