A guide to HMRC’s Time to Pay (TTP) agreements, which will help viable businesses navigate financial issues. The guide delves into what TTP agreements entail, discusses their bespoke nature tailored to individual businesses and how best to get one agreed with HMRC. Early engagement with HMRC is critical as well as seeking reasonable repayment timeframes and honouring TTP terms and ongoing tax liabilities. We regularly assist in securing TTP arrangements.
If your business owes money to HMRC (His Majesty’s Revenue and Customs) that it can’t pay immediately you will probably wish to pay overdue taxes by instalments. This guide provides an essential insight into how our legal team can use their experience and secure your business a favourable Time to Pay agreement from HMRC, which is a key step in preserving financial stability and warding off HMRC Debt Management threats of insolvency (such as a HMRC Statutory Demand, Bankruptcy or a HMRC Winding-up Petition). Our leading tax experts with years of experience of handling HMRC officers can be instructed to deal with HMRC on your behalf, ensuring a smooth and confident process.
In recent times, the landscape of tax compliance has seen significant changes, with HMRC taking a more proactive stance to tax debt collection. They have expanded their compliance team, and the number of winding up petitions issued by HMRC has surged in 2023. This increased scrutiny has put pressure on businesses, particularly those grappling with COVID-related tax deferrals or financial challenges resulting from recent economic turbulence in the UK.
Simultaneously, the cost of late payments being made to HMRC has risen substantially, with interest charges tied to the Bank of England’s base rate. As a result, many businesses are now exploring the possibility of negotiating Time to Pay (TTP) agreements with HMRC to better manage cash flow and tax payment arrears.
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What is a HMRC Time to Pay Agreement?
HMRC’s Time to Pay agreements are structured plans that enable business owners to repay their arrears typically of PAYE, NICs, VAT, or Corporation Tax over an agreed reasonable timeframe. These agreements provide an effective means of addressing cash flow pressures and HMRC liabilities, ensuring businesses can manage their repayments over a manageable period.
Crucially, TTP arrangements are tailored to the specific financial circumstances of each business, meaning there’s no one-size-fits-all solution. Instead, the terms are customarily designed to suit the business’s financial capacity and needs. This means that businesses have to negotiate with HMRC to obtain a TTP agreement; our lawyers have many decades of experience in obtaining TTP installment agreements with HMRC.
Financial Challenges in the Current Tax Landscape
The Covid-19 pandemic led to the standardisation of three-year or longer Time to Pay agreements. However, as the pandemic’s economic impacts continue to recede, HMRC has taken a more proactive approach to tax collection. As a result, it’s vital for businesses to engage with HMRC early and negotiate a reasonable repayment period.
HMRC’s debt owed by corporates reportedly reached £72 billion in 2020, leading to an increased urgency now, post-pandemic, to recover these funds. Therefore, securing the right TTP agreement, tailored to your cash flow and spanning the longest reasonable timeframe, is crucial.
Key Features of a Time to Pay (TTP) Agreement)
A Time to Pay (TTP) agreement with HMRC is a structured plan outlining the terms for repaying outstanding tax arrears, such as PAYE, VAT, or Corporation Tax, over a specified period. While the exact contents of a TTP agreement can vary, the typical elements include:
The specific terms of a TTP agreement are highly flexible and tailored to the business’s financial situation. Close collaboration with HMRC, early engagement, and a clear rationale for the TTP agreement are key to securing favourable terms and our firm can assist you with exactly that. Our team has experience in dealings with HMRC and we can help you secure a TTP Agreement tailored specifically to your requirements.
- Tax Arrears Details: Specifics about the type of tax arrears and the total amount owed are clearly stated.
- Repayment Schedule: The agreement outlines the agreed-upon repayment plan, including payment amounts, frequency, and the overall duration.
- Interest and Penalties: The agreement may address any accrued interest and penalties, potentially specifying whether these will be reduced, waived, or included in the repayment plan.
- Terms and Conditions: Both the business and HMRC must adhere to specified terms and conditions. These may cover consequences for missed payments or failure to meet agreed terms.
- Confidentiality: A confidentiality clause may be included to protect sensitive financial information shared during the negotiation.
- Review and Modification: Provisions for reviewing and modifying the agreement in case of changing financial circumstances.
- Default Provisions: Consequences of defaulting on the agreement are outlined, including potential enforcement actions by HMRC.
Negotiating Time to Pay (TTP) with HMRC
While HMRC is generally open to agreeing to payment plans, they do so with the expectation of full compliance. Businesses must provide a clear reason for their inability to meet tax payments on time and demonstrate a genuine commitment to making payments as agreed. Failure to honour the terms of the agreement or meet ongoing HMRC liabilities may lead to a more aggressive approach.
HMRC’s Time to Pay agreements can be a valuable lifeline for businesses facing financial difficulties, especially in turbulent economic times. The key is to approach HMRC with a clear rationale, be prepared to negotiate terms, and demonstrate a firm commitment to meeting your financial obligations. Engaging with HMRC early, being transparent about your financial situation, and presenting a well-thought-out plan can build a positive working relationship and increase the likelihood of reaching a mutually beneficial agreement and our firm can help you do that.
Requirements of a Time to Pay (TTP) Agreement?
When applying for an HMRC Time to Pay (TTP) arrangement, it’s essential to build a compelling case for an extension. A strong case involves presenting a realistic proposal, supported by key evidence, to demonstrate your ability to meet financial obligations. This evidence should include:
- Sales and Cash Flow Forecasts: Provide detailed forecasts for sales and cash flow over the next six months or longer to showcase your financial planning.
- Cost Reduction Plan: Develop a clear plan outlining how you intend to reduce costs, freeing up extra cash for repayments.
- Determination for Repayments: Convey your unwavering commitment to consistently meeting your financial obligations and repayments.
HMRC generally prefers shorter TTP arrangements with higher repayments to expedite money recovery. However, it’s imperative to offer only what your business can realistically afford and ensure it can meet the obligations outlined in the plan before final agreement.
Dealing with HMRC can be complex and time consuming, which is why many clients opt for the assistance of authorised and regulated tax solicitors who can negotiate on their behalf and our firm can do exactly that. Our expertise can streamline the process and increase the likelihood of securing a favourable TTP arrangement.
How can Tax Disputes Lawyers help deal with HMRC?
Navigating the complexities of HMRC’s Time to Pay agreement can be challenging. Our specialist Tax Solicitors and Barristers possess expert technical knowledge, strong negotiation skills and respected advice, which can make a pronounced difference to eventual tax penalties, charges and liability. We specialise in providing tailored solutions for negotiating TTP with HMRC, ensuring compliance with HMRC regulations while optimising your tax position.
Our experienced team can assist you in:
- Ensuring Compliance: We stay up to date with the latest tax regulations and will help ensure your business remains compliant with HMRC’s guidelines.
- Strategic Planning: We’ll work closely with you to develop a strategic tax plan that aligns with your business goals, optimising your tax efficiency.
- Risk Mitigation: Identify potential risks and address them proactively, protecting your business from unexpected tax liabilities.
- Audit Representation: If your property business faces an audit, our legal representation will ensure a fair assessment of your tax position.
Contact Our Tax Solicitors & Barristers
HMRC assesses penalties based on factors like lost revenue, taxpayer behaviour, and disclosure promptness. Our legal team can help negotiate penalties with HMRC. Disclosing financial information voluntarily is advised, as HMRC may impose harsher penalties later. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries and investigations. Our team specialises in successfully challenging HMRC decisions and will assist you every step of the way. We provide urgent advice and representation to clients from our unique expert team of established Tax and Duties specialist solicitors and barristers with a proven track record of delivering authoritative results. Just call us on 0207 1830 529, or email [email protected].
HMRC APPEAL DEADLINES – WARNING
HMRC decision letters containing penalties or imposing assessments offer time limited deadlines within which to appeal. Often these short deadlines (e.g. 30 days) can run from the date of the letter which means you have less time than you think. Your legal rights will become irreversibly time-barred if you fail to take legal action. Therefore, you should seek specific legal advice about your HMRC tax dispute at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success.