If your business is struggling to meet its outstanding tax liabilities (including PAYE, NICs, VAT and Corporation Tax), you may be able to defer payment by agreeing a Time to Pay arrangement (TTP) with HMRC.
Your TTP can include taxes that were deferred as part of HMRC’s coronavirus support measures, such as VAT that was due between April and July 2020 and is now repayable by the end of March 2021.
HMRC will consider a TTP request right up to the point of enforcement proceedings, even if they’ve already sent you a payment demand. If agreed prior to the taxes falling due, you will also avoid surcharges and penalties.
What to include in a TTP request
As part of any TTP request, HMRC will want to see some or all of the following:
- the reasons why you can’t pay the liabilities;
- evidence of a viable ongoing business;
- alternative cash flow options that you’ve explored;
- key stakeholders’ support for the business;
- a proposal to repay the liabilities as soon as possible;
- an explanation of how and why the repayments are sustainable;
- a proposal to repay future accruing HMRC liabilities expected in the forecast period;
- the business’s tax compliance and payment history;
- the full amount of the HMRC debt;
- your cash flow, profit and loss, and balance sheet forecast;
- the business’s repayment history;
- any previous TTP arrangements; and
- other company information, such as the overall asset position and whether any dividends have recently been paid.
How we can help
We can assess your reasons for needing a TTP and determine the correct approach to take, considering the value of your debt as well as the length of TTP needed. Then we can prepare a coherent explanation for HMRC.
By engaging in early and constructive talks with HMRC, we can then help you establish a payment plan to settle the tax liabilities over a mutually agreed period. If required, we’ll prepare a suitably detailed written proposal, keeping lines of communication with HMRC open. And with an understanding of your cash flow, we can assist you to consider other options if they’re needed.
HMRC’s preferential status
The Finance Act 2020 gives HMRC preferential status in respect of certain taxes in UK insolvency law from 1 December 2020, strengthening their position at the expense of other creditors in formal insolvency cases including administration and liquidation. However, this should not stop HMRC being open to negotiations about deferring tax liabilities as an alternative to a formal insolvency scenario.
We have a national team of experienced restructuring professionals available immediately to provide full support for you throughout. Using our relationships with senior officers at HMRC, an understanding of TTP policy and criteria, and tax specialists within the firm we’ll work to get the best outcome for you.
Contact our restructuring advisory team to find out how we can help your business.