All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
You are eligible if your business:
• pays tax to the UK government (note: the scheme does not encompass the devolved Scottish or Welsh revenue agencies)
• has outstanding tax liabilities
How to access the scheme
If you have missed a tax payment or you think that you might miss your next payment due to COVID-19, you should call HMRC’s dedicated helpline: 0800 0159 559.
Before you call
Tax returns: If you prepare your own tax returns, you should ensure that they are up to date: In our experience HMRC is usually more amenable to agreeing to a time to pay arrangement if the filing of tax returns is up to date and the correct tax liability has already been established.
Cash flow forecasts and budgets: In order to be able to explain the business’s situation and how the pandemic has affected cashflow, you need to have financial forecasts and a statement of assets and liabilities available.
Be realistic about the timeframe to be requested: Most HMRC debt management contact centre staff have authority to agree time to pay arrangements for periods of up to 12 months. Longer periods can be arranged but this requires the approval of more senior HMRC staff.
Be prepared for robust questioning: HMRC staff are trained not to be credulous and to ask searching questions. In the present pandemic they may be instructed to dial this down but in any case it is important to maintain a calm and pleasant manner.
Deal or no deal: It seems strange to advise that no agreement may be better
than an unaffordable agreement: It is often better for a business to reject an offer which the business will not be able to maintain over its lifespan. If a time to pay agreement is not kept to it is difficult to get HMRC to reestablish it and HMRC will be more reluctant to make agreements in the future
Estimate future tax bills: A standard condition of all HMRC time to pay agreements is that future tax liabilities are paid in full as they fall due. Where this is not possible it is necessary to contact HMRC again to renegotiate the arrangement to include the new debt. HMRC is often reluctant to agreed repeated requests for time to pay but may be more amenable in the current situation.
Choose wisely: Based on our experience HMRC is usually more willing to consider agreeing time to pay for income tax and corporation tax rather than for taxes such as VAT and employees’ PAYE and National Insurance contributions, which businesses are effectively collecting on behalf of the exchequer. The usual advice is to prioritise paying VAT and employer liabilities as HMRC pursues these more actively.
You should remember that the next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period. The deferral applies automatically and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.
In these uncertain times we can help! We regularly assist clients with negotiating time to pay arrangements with HMRC. Our expert team is available to provide you with advice and can be contacted on 01273 326 556 or you can drop us an email at email@example.com or speak with an account manager to get any process started.
Here at SRC-Time, we will endeavour to keep you updated with all the latest information regarding financial aid at this testing time. Please note that the Government makes fresh announcements every day so please ensure that you have the latest information.