Time to pay arrangements allow businesses to pay tax over an agreed period of time. This can apply, for example, if you have been issued with an assessment, a default surcharge, a determination, or an Accelerated Payment Notice by HMRC.
If you aren’t able to pay your tax on the due date it may be possible to arrange for you to make payments over a period that you can afford. These arrangements can be tailored to meet the needs of the individual taxpayer but must be agreed by HMRC. Time to pay arrangements typically allow the taxpayer to pay over a few months but can be longer. Time to pay arrangements lasting more than one year can be agreed in exceptional circumstances. As HMRC expect an outline of your time to pay proposal, including the period over which you are seeking to pay, frequency of payments and the amount of the initial payment, our team can help you establish this. HMRC would expect to see the following documentation as part of your proposal:
- projected income and expenditure schedule
- summary of assets and liabilities
- borrowing capacity
If your ability to pay is contingent upon the financial position of a trading company in order for you to take a ‘distribution’ to fund payment then HMRC will also require:
- a copy of the latest set of company accounts
- management accounts including a profit and loss account for the intervening period
- details of any other draft accounts/business accounts/cash flow projections
- bank facility details
When it comes to paying a time to pay arrangement this has to be done through a direct debit. The thinking behind this is that direct debits are more cost effective, safer, easier and less time intrusive as a means to make payments. In addition, the direct debit scheme provides a guarantee to protect the person making the payment and reduces the need for them to be in frequent contact with HMRC.
HMRC acknowledge that there may be certain scenarios where payment via direct debit isn’t possible, in these cases others payment methods can be agreed.
If you’d like to talk to the Bedrock team about negotiating a time to pay arrangement get in touch.