DMBM800040 - Time To Pay: introduction: principles of Time To Pay

Time To Pay (TTP) arrangements allow HMRC to collect tax in a cost effective way. They allow viable customers who cannot pay on the due date to make payment(s) over a period that they can afford. Arrangements are tailored to the ability of the customer to pay and are typically for a few months although they can be longer. TTPs lasting over a year are only agreed in exceptional cases. Most arrangements involve regular monthly payments being made but in exceptional cases may involve a short period of deferral.

Principles of TTP

TTP arrangements fall within the scope of HMRC’s discretion provided the following principles are followed

• Objective criteria are applied in each case
• TTP arrangements are entered into on a case by case basis
• TTP is only agreed where HMRC is satisfied that the customer cannot pay their liability on the actual due date(s)
• The customer offers the best payment proposals that they can realistically afford. If their ability to pay improves during the TTP period then they must contact us and increase their payments/clear the debt
• TTP is only agreed where HMRC believes that the customer will have the means to pay the taxes included in the TTP arrangement and any other taxes outside the arrangement which become due during the TTP period
• The TTP period is as short as possible
• The same principles are applied to all taxpayers, although the detail of processes can be tailored to reflect the risk/return associated with different liabilities. As a rule the larger the liability the greater the risk and the greater the need for more information.

Other guidelines

Under no circumstances can HMRC ever reduce the amount of tax due as part of a TTP arrangement

If repayments of tax become due during the TTP period HMRC must offset these against the debt. HMRC cannot on the one hand allow TTP whilst at the same time issuing a repayment of tax

We can only agree TTP based on the customers means to pay and can’t base it on other factors. For instance we can’t allow TTP on the basis that a business could invest this money to produce greater payments of tax in the future.

For business taxes the TTP duration should be less than 12 months. Exceptionally periods in excess of 12 months can be considered.

Applicable interest will always be charged when payments are received after the due date, irrespective of whether TTP has been agreed or not.

HMRC is bound by TTP agreements that it enters into but is entitled to withdraw if

• new facts come to light that don’t support TTP
• the customer has misled us or been untruthful
• the customer defaults on the arrangement or does not satisfy the conditions of their TTP
• any other reason comes to light where it becomes apparent that tax is at risk