Need a delay with your Corporation Tax liabilities or PAYE/ NIC payments? Have you considered Time to Pay?

During these difficult times, HMRC and the Treasury have thrown a number of lifelines to the business sector, i.e. the Coronavirus Job Retention Scheme, SEISS, loans/self-assessment deferral and VAT deferral. However, as no deferral has been granted in respect of Corporation Tax liabilities or PAYE/NIC payments, businesses that attempt to get up and running again as the lockdown eases may find themselves in difficulty funding these liabilities, especially when business was tough even before lockdown.

If your business is facing that challenge during this time, you may be asking: will HMRC give me more time to pay Corporation Tax or PAYE/NIC liabilities if I cannot pay them on time? The answer is, they may, if you make a request for a Time to Pay arrangement with them.

What is Time to Pay?

A Time to Pay (TTP) arrangement with HMRC is an agreed plan for you to repay outstanding tax, i.e. debt to HMRC at a later date. It could be applicable for various types of tax including VAT, PAYE, Corporation Tax and income tax. The repayment period may vary depending on your specific situation, but typically HMRC may allow for a period up to 12 months. Longer periods are possible depending on your specific situation.

Are you eligible for TTP?

If you have outstanding liabilities, you will be eligible to contact HMRC about setting up a TTP arrangement. Nevertheless, how likely your request will be accepted may depend on various factors such as your past record of tax compliance, the sector/industry you operate in, as well as your current financial situation amid Covid-19. Each business will ultimately be considered on a case by case basis.

Some key points you need to know before contacting HMRC about TTP

• When to apply? As soon as possible if a tax payer thinks they will have difficulties making their next payment on a timely basis.
• What do you need to prepare beforehand? Full information concerning the individual or business’s financial situation should be available, including but not limited to details of bank loans presently held, details of application for additional bank funding, the sale of assets, etc. This is because questions asked by HMRC can be detailed to the extreme.
• Will there be interest involved? In any TTP arrangements, forward interest will be charged where appropriate.

You can read more about Time to Pay on the government website: https://www.gov.uk/difficulties-paying-hmrc.

It’s important to act now

While in recent months, HMRC Debt Management teams appear to have been applying a light touch in relation to the collection of arrears, this will not last forever. With this in mind, if your business has a tax debt, you should approach the appropriate Debt Management Team and reach agreement to clear the arrears in a formal arrangement over a period of time.

At DTE, our Tax Dispute Resolution team have considerable experience in dealing with HMRC to put in place TTP arrangements that work and are acceptable to both the business and HMRC. If you need help or wish to discuss your specific situation, please contact Alan McCann, DTE Head of Tax Dispute Resolution at [email protected] or call 07715755238.