If your company, or you as an individual, are struggling with debts to HMRC, your best course of action may be to undertake a Time to Pay(TTP) arrangement. This is an agreement whereby HMRC allows you to repay your debts monthly over a period usually spanning 6-12 months, but in some cases over a longer period.
There is no standard for TTP Arrangements. They are all determined by the financial circumstances of the individual or company applying for them. They are designed to be flexible over time to ensure HMRC is paid what it is owed.
It’s important to know that this option can be taken before payment is due. If you project that your company will struggle with paying debts to HMRC soon, you must take action as soon as possible. If you are unsure where you stand with your debts to HMRC, contact us for further advice.
What are the benefits of a TTP Arrangement?
TTP Arrangements can be a useful way of keeping the wolves from the door if you’re a director struggling to deal with creditors. If your business is struggling, time is invaluable. TTP Arrangements can allow you a moment to consider your best options while not having to deal with persistent creditors immediately.
In consultation with a professional advisor, you can assess the state of your business and select a path forward that is best. For example, if your company is no longer viable, this may be Voluntary Liquidation, in which case a TTP may free up some cash to pay for the liquidation process.
How to apply for a TTP Arrangement
To apply for a TTP Arrangement, you will need to produce your case in writing alongside supporting cash flow reports. This is in addition to making a phone call to HMRC’s Business Payment Support Helpline.
During the call, they will ask about the health of your business, how you have found yourself in a position unable to pay, and how you plan to address the situation to pay HMRC.
The process is designed to determine what you can afford to pay or whether you can afford to pay your debt back at all. Therefore, it is crucial not to inflate what you can repay. If HMRC believes that you will not make the repayments, they will not approve your TTP Arrangement.
Negotiating a TTP Arrangement
When negotiating your TTP Arrangement, the most important factor is that your case represents an honest reflection of your business. The call will see the interviewer assessing several characteristics about your company, including:
- Whether it has a long-term future
- How likely you are actually to repay your debt to HMRC
- The actions that can be taken if you don’t stick to your plan
You will only be granted a TTP Arrangement if HMRC are confident you will repay your debt. Realistic and achievable goals are the best course of action.
If HMRC discovers you have falsified any information on your TTP application, they can terminate the agreement immediately. Similarly, if you fail to make the agreed payments, the agreement can be terminated or renegotiated if this is due to a change in circumstances not relating to the business’s long-term health.
Directors must also be aware that these agreements in no way reduce the debt owed to HMRC. Instead, they extend the period of time in which you have to repay what you owe.
What if my TTP application is rejected?
If your TTP application is rejected next steps depend on the viability of your company. If your company is still viable, you should contact a turnaround consultant and approach HMRC on your behalf. An approach from an organisation specialising in company recovery may make your case more convincing.
Another alternative may be entering into a Company Voluntary Arrangement (CVA) to restructure and address debt issues.
There are still several options available to you as a director. You should contact Focus Insolvency for advice on the best route forward.
TTP Arrangements are designed for companies with genuine long-term viability but are presently experiencing short-term issues. The period during the pandemic has made companies in this situation more common than ever. If you need help determining if your best path forward is a TTP Arrangement, contact Focus Insolvency for a free consultation.