If a business or individual is struggling to make a tax payment because of genuine financial hardship or personal difficulties, then they may be eligible for a Time to Pay (TTP) arrangement.
As we approach the Self Assessment tax return deadline, the Clayton & Brewill team discusses TTP and how it can be useful for those going through tough times.
What is Time to Pay?
TTP arrangements allow HMRC to collect tax in a cost effective way by permitting viable individuals or businesses who cannot pay on the due date to make payments at a time they can afford. Arrangements are uniquely tailored towards when the individual can pay and usually occur over a few months, with plans exceeding 12 months being incredibly rare and only agreed in exceptional cases.
TTP can be used for business taxes such as VAT and employer’s PAYE as well as personal self-assessment liabilities. It can cover all outstanding amounts due, including penalties and interest.
How does it work and who can apply?
Individuals can set up a repayment plan online without having to phone HMRC when the total debt is below a particular threshold. A Self Assessment payment plan can be created if £30,000 or less is owed. For an employers’ PAYE payment plan, this figure is £100,000 or less.
In order to set up a payment plan, the payee is required to have:
- A reference number for the tax they cannot pay, such as a unique tax reference number
- UK bank account details, which must be authorised to set up a Direct Debit
- Details of any previously missed payments
HMRC will require a proposal for how the debt will be paid as quickly as possible and will expect individuals to use savings or assets in order to do this, if they have any.
It is also important to note that interest still runs on overdue tax even with a TTP arrangement and HMRC will expect any new debts to be paid in full and on time.
How we can help
At Clayton & Brewill, we understand how complicated tax payments can be and how difficult it can be for individuals who are struggling to pay on time. We can provide you with friendly, efficient and effective year-round advice on all aspects of personal and business taxation to ensure you are able to meet deadlines where possible and understand what support is out there if you cannot.
Please get in touch today for advice tailored to your situations.
