Time To Pay agreements

Time to Pay agreements are for when taxpayers find it difficult to pay all or part of their tax debt(s). Whilst HMRC are not to be seen as a lender of first resort, HMRC understand that sometimes they may need to offer help to a taxpayer in the short term when all other avenues of raising funds have been exhausted.

What terms might HMRC offer?

Interest will be payable calculated on a daily basis. The current interest rate charged by HMRC can be found on HMRC’s website (2.75% on 24 November 2020) and is directly linked to LIBOR.

How long will HMRC give to pay the debt?

Unfortunately there is no one simple answer.

A number of factors will need to be considered including:

  • How much tax is owed in total
  • How much tax is owed under each heading such as Income Tax, VAT etc.
  • The previous history of taxes being paid
  • The repayment period being sought
  • Security offered

No one item will be considered as a “deal breaker”.

Time To Pay agreements

HMRC will seek financial data from the taxpayer both for the past and future in support of any application for Time To Pay.

A Time To Pay Agreement is a legal contract between HMRC and the taxpayer setting out what is owed and what has been agreed. Time To Pay agreements can be over a matter of days, months or years depending upon the facts.

Negotiations with HMRC

Time To Pay agreements are negotiated with HMRC. HMRC will want to see what other steps have been taken with other potential lenders. HMRC may ask for evidence in order that any proposal is on a firm financial footing.

If a taxpayer fails to abide by a time To Pay agreement, any remedy is a matter of contract law, not tax law.

If a taxpayer anticipates any problem keeping to a Time To Pay agreement is well advised to contact HMRC sooner rather than later.

Help is at hand

If you would like to discuss this matter further, please contact me at paul@pmc.tax or on 07979 313 010.

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