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Time to Pay Arrangements: How they work and what to do if they fail

TTP arrangements are designed to help viable businesses that are facing temporary cash flow problems. If these cash flow issues are making it difficult for your business to meet its tax liabilities when they fall due, then a TTP could be beneficial for you.

A TTP allows your business to negotiate with HMRC to pay your tax bill over a longer period of time – usually 6 – 12 months – if you can prove you can afford to pay the bills. TTP’s can be used for VAT, PAYE and corporation tax arrears and it can also be used in anticipation of problems with upcoming payments. Whether your business operates as a sole trader, a traditional partnership, a limited company, a limited liability partnership (LLP) or any other form of association a TTP is available to you.

How to apply for a TTP arrangement?

If you are worried about accumulated tax arrears contact us without delay. Even if you are in an existing TTP arrangement and you have not managed to meet all the terms we may be able to arrange an extension of terms.

We will put together a proposal which focuses on:

  • Your sales and cash flow forecasts for the period requested
  • Demonstrating how your business will meet  the TTP payments
  • Showcasing your willingness to meet the repayments
  • Your track record with HMRC.

When we negotiate with HMRC, they will look at the proposal, your sector and your history of debt repayment. You should only offer to pay what you can afford per month, after liabilities and obligations have been met.

If HMRC agree to the proposal, they are likely to continue charging interest on your debt but they may lift any penalties you have been given, especially if you contact HMRC quickly to deal with your debt. It is important you meet the terms of the proposal and pay on time, if you default on a TTP then HMRC can cancel the arrangement, call in the debt and apply penalties.

time to pay arrangements

In an existing TTP but have fallen behind with payments?

If you have just finished a TTP agreement but have not maintained all the payments it may still be possible to arrange to extend the term or renegotiate a new TPP. If you have made an effort with your previous arrangement to try to meet payments and pay on time, and you can demonstrate that there were reasonable circumstances HMRC may look favourably on your new proposal.

However, if you regularly missed payments and made no attempts to keep in contact with them, they are highly likely to reject your proposal and push ahead with measures such as a winding-up petition (WUP). If this happens, you should get in touch with us without delay if you are to have a chance of saving your company.

Refused a TTP, what next?

If HMRC have any doubts about your company or the proposal you have put forward, they will reject your application. Rejection of the application can be a cause for concern for you as you may now struggle to see a way to get your business back on track.

TTP proposals are usually rejected because:

  • HMRC have reason to doubt your ability to clear the debt in the period suggested.
  • Your previous contact with HMRC particularly if you have a track record of late submission of tax returns, failure to respond to correspondence, not keeping to previous arrangements or not keeping HMRC informed of your financial situation.

If your TTP proposal has been rejected, there are other business restructuring or insolvency options available to you, including:

  • A company voluntary arrangement (CVA) This allows you to consolidate your business debts into one monthly payment to all your creditors. This can be beneficial for HMRC debts, as well as debts to other unsecured creditors such as your suppliers. A CVA usually lasts for five years and can be a powerful restructuring tool for many businesses which remain profitable but are currently struggling with debts.
  • A creditor’s voluntary liquidation (CVL) This insolvency tool allows you to close down your company in an orderly manner. If you don’t see any future for your company, then this may be the correct solution for you. Once a liquidation has been decided on, get in touch with us and we will help you put together the appropriate documents for creditors and we will work to close down your company as quickly and efficiently as possible. In some instances, it may be possible for you to purchase assets of the old company from the liquidator at market value and recommence trading if you feel the core business has a viable future.
  • Compulsory liquidation Although this is not a choice, if a TTP arrangement has failed or has been rejected, HMRC may look into issuing a WUP against your company. If you do not dispute the debt and you think closing your company down is the best and most sensible option then you can let the WUP go through which will result in the liquidation of your company. However, you will not have any control over the liquidation process and little opportunity to continue trading if that is your wish.

What does it cost?

The costs depend on the complexity of the case, which in turn is frequently related to the amount involved. Whatever the situation we provide a fixed price quote for you once we have more information. Any initial meeting conducted with you will be free of charge.

If you are wanting to apply for a TTP or your TTP proposal has been rejected, get in touch with us on 0800 901 2475 as soon as possible. We have plenty of experience dealing with HMRC to negotiate on your behalf and we will discuss your company’s current situation and where you can go from here confidentially and with no initial cost to yourself and your company.

Authored by Phil Meekin

Phil Meekin

Senior Consultant

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