It’s no secret that many UK businesses are struggling to meet their tax liabilities, mainly due to cash flow problems. This has only been exacerbated following the outbreak of the COVID-19 coronavirus.
If, like thousands of other companies, your business is struggling with the havoc COVID-19 is causing, you do have options. Crucially, you may be able to negotiate an arrangement with HMRC to pay over a longer period of time – through a Time To Pay (TTP) arrangement.
What’s a Time To Pay arrangement?
Essentially, it’s a way of spreading business tax payments over a longer period of time, in order to make them more affordable. It’s long been a solution for UK businesses who are suffering with cash flow concerns, and it can provide some much-needed breathing space for your company until its cash flow situation improves.
A TTP works as a method of spreading out tax payments over a longer period of time than usual. The arrangement can be applied to corporation tax arrears, VAT and PAYE. If you are anticipating problems with future payments, it can also be used to help your company avoid late payment penalties.
Keep in mind that if your company is on the verge of insolvency, HMRC may act quickly to recover money owed. A TTP arrangement can only be used if your company is still solvent. The responsibility lies with you to initiate contact with HMRC should issues with tax payments arise. So, be proactive and contact them regarding a TTP arrangement instead of waiting to be contacted by them.
How do I apply for a TTP arrangement?
If you think you have a strong case to support the fact that your company needs extra time to make payments, you can contact HMRC directly or get help from an experienced Insolvency Practitioner who can negotiate on your behalf.
In order to present your case, you’ll need to provide evidence of what you can afford to pay back and why you need more time to make payments. This is likely to include forecasts of cash flow and sales for the next 6 months, along with plans on how your company will cut costs to free up extra funds.
If a TTP arrangement is agreed
Even if you get an arrangement agreed, keep in mind that HMRC will want the highest repayment possible over the shortest possible period of time. So, you need to ensure that your company can meet the payments in full and on time before anything is agreed. Failure to do so may result in the arrangement being cancelled, which could lead to further penalties and a call for the total debt.
The terms of instalments are generally set over 3 to 6 months, but terms of up to 12 months are also possible. The amount of time offered depends on your individual circumstances, your previous history of payment and your company’s perceived risk.
If you get approved, then a TTP arrangement is an ideal way to gain breathing space from your company’s cash flow concerns. It can also help you to avoid formal insolvency procedures and legal action, along with surcharges and penalties as long as it was put in place before a tax payment was due.
Clarke Bell are always here to help
No one knows the full impact that COVID-19 will have on businesses throughout the UK, but a TTP arrangement can provide some crucial respite during these challenging times.
At Clarke Bell, our experts are still here to help provide advice for you when you need it the most.
If you want to discuss how a Time To Pay arrangement could help your company’s financial position, Clarke Bell can give you professional advice on how to present your case.
Contact us today on 0161 907 4044 or [email protected]