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How to Negotiate a Time to Pay Arrangement With HMRC
8 August 2022

For struggling companies, regaining control over their finances is paramount. If their financial situation continues to deteriorate, insolvency is highly likely, which carries a range of negative consequences for the company and its directors. As such, any tool that can be used to help remedy the situation should be strongly considered.

One such tool is a Time to Pay (TTP) arrangement. This arrangement can be struck with HMRC, affording companies that have fallen into tax arrears extra time to catch up with their repayments. In this article, Clarke Bell will break down TTP arrangements, their benefits, and how you can negotiate one with HMRC.

What is a TTP arrangement?

A Time to Pay arrangement is negotiated with HMRC to extend the payment window for a company’s tax arrears. These arrangements tend to last around six months, though they can reach up to twelve months or somewhere in between, depending on a company’s circumstances. If an arrangement is reached with HMRC, a company must ensure its tax arrears are paid before the extension lapses. These payments will be made in monthly installments, with the amount determined by the TPP arrangement.

Depending on how you have managed your tax affairs previously, you may find negotiating a TPP easy or difficult. Naturally, if you have kept up with your tax payments previously, kept in contact with HMRC, and handled the process well, you will likely have an easy time negotiating a TPP. However, if your tax history isn’t ideal, with numerous late payments and poor communication, you will likely face much more difficulty. That said, successfully negotiating a TPP isn’t impossible, regardless of your tax history. With a compelling case and professional support, a successful TPP arrangement is more than realistic.

How to negotiate a Time to Pay arrangement

If you are struggling to make your tax payments, but could cover the cost given more time, it’s worth contacting HMRC before taking other measures. This can be done via phone, email, or writing. Once you have contacted HMRC, you will need to provide several written documents as part of the negotiation process. These include copies of your company’s finances, your case for a TPP arrangement, and your offer of monthly repayment.

Making a persuasive case grounded in reality is of vital importance during your negotiation with HMRC. Reflecting your company’s true situation will have an effect on whether you successfully negotiate a TPP arrangement. Being caught in a lie will likely halt your negotiations in their tracks, and if dishonesty is found after the arrangement is made, HMRC can void it. Additionally, overestimating the amount your company can pay each month can cause problems of another stripe. You will be expected to make the agreed-upon payments; an unrealistic proposal may be seen as a red flag by HMRC, leading to your TPP arrangement being rejected. However, if your proposal is accepted, it may put excessive strain on your company’s finances. Defeating the purpose of your negotiations.

In addition to providing HMRC with written documents, you will also be interviewed to explain your case. The majority of this interview will surround the viability of your company and whether the TPP arrangement might bring success or not. Naturally, the answers to these questions will determine the likelihood of you succeeding in your Time to Pay arrangement negotiations. In addition to outlining your case, your interviewer will also make you aware of what penalties may be applied if you knowingly provided false information or broke from the arrangement’s terms. If you find the idea of negotiating your TPP arrangement daunting, you have the option to appoint a professional to negotiate on your behalf. They will communicate with HMRC for you, with a view to getting you the best TPP arrangement possible.

Why negotiate a TPP arrangement?

While they expect regular tax payments, HMRC understands that the financial situations of companies are not static. Certain events can transpire that negatively impact a company’s cash flow. Something everyone knows all too well in the wake of the pandemic. But it isn’t only large events that can cause damage to a company’s finances; everything from supply chain problems to a simple lack of demand can damage a company’s cash flow, making them unable to keep up with liability payments. In situations like these, HMRC is often willing to ease the pressure through a TPP arrangement.

As mentioned, this arrangement can afford companies additional time in which to pay their tax bills. This lessens the financial pressure faced by these companies. Allowing them to either regain control over their financial situation, or consider other alternatives to remedy the problems they face. The exact amount of time and monthly repayment amounts will vary between companies depending on their situation. While these advantages can be enough to bring some companies back to financial stability, other companies need a more substantial alternative.

Alternatives to negotiating a TPP arrangement

Though negotiating a TPP arrangement can be a great solution for some companies, it isn’t always enough. For insolvent companies with significant financial problems, an extension to their tax payment window won’t do the trick. These companies would instead benefit from a more thorough solution, such as a Creditors’ Voluntary Liquidation (CVL). This method is the best solution for insolvent companies, providing significant benefits that can help alleviate their financial problems.

A CVL is a formal procedure that liquidates an insolvent company. Once the procedure begins, it affords companies and directors certain protections. Creditors cannot take legal action against the company, and the personal finances of directors cannot be touched, if debts remain unpaid after liquidation. Moreover, the CVL procedure is executed by a licensed insolvency practitioner. Their job is to ensure companies are liquidated as efficiently as possible, and with close adherence to the law. With this procedure, you can rest assured that your company will be closed properly. Leaving no loose ends, and your obligations to both creditors and shareholders will be met in full. For more information on Creditors’ Voluntary Liquidations, read our complete guide to the process.

Let Clarke Bell help

If your company is struggling with making its tax payments, or with any other liabilities, then let Clarke Bell help. We have over 28 years of experience in helping companies through financial trouble, and we can do the same with yours. Our experts will find the best solution for your company, whether it be a CVL or otherwise. To find out exactly how we can help you, don’t hesitate to contact us today.

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If you are worried about your business or just want a (free) no obligation chat, contact Clarke Bell on 0161 907 4044 or [email protected] today. Our Licensed Insolvency Practitioners will provide you with the best professional advice for your situation.

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