In this Blog, our head of tax disputes, Andy Lynch, looks at Time To Pay Agreements and how HMRC might approach them in 2026
A Time to Pay arrangement is an agreement with HM Revenue & Customs that allows tax debts to be paid in instalments rather than immediately. In 2026, Time to Pay remains an important tool for individuals and companies under tax pressure, but it is not a right and it is not a guarantee of protection. HMRC’s approach is increasingly risk focused, and poorly prepared proposals can lead to faster escalation rather than relief.
TTP at a glance
Time to Pay can stabilise tax debt and pause enforcement, but only where HMRC is satisfied the arrears are temporary and affordable. Timing, evidence, and compliance history are critical. Failed arrangements often accelerate bankruptcy or winding up action.
What is an HMRC Time to Pay arrangement and when will HMRC agree to one?
A Time to Pay arrangement allows outstanding tax liabilities to be cleared over an agreed period, typically by monthly instalments. It is designed for taxpayers who are unable to pay in full on time but can demonstrate that the position is short term and manageable.
- HMRC will usually only consider Time to Pay where the taxpayer has engaged early, filed returns on time, and can show that future liabilities will be met as they fall due.
- It is not intended to support long term insolvency or repeated non compliance.
In 2026, HMRC is increasingly selective. Arrangements are more likely where there is a clear explanation for arrears, such as temporary cash flow disruption, and a credible plan to recover.
In summary – Time to Pay is discretionary and focused on short term difficulty, not structural insolvency.
How does HMRC decide whether a Time to Pay proposal is acceptable?
HMRC’s assessment is evidence driven. Taxpayers are expected to provide clear financial information, including income, expenditure, assets, and other liabilities. For companies, HMRC will scrutinise cash flow forecasts, trading viability, and director conduct.
Affordability is central. Proposals that minimise repayments without justification are often rejected. HMRC also considers compliance history. A pattern of late payment or repeated Time to Pay requests undermines credibility.
For directors, PAYE and VAT arrears attract particular scrutiny. HMRC will look closely at whether tax has effectively been used as working capital and whether the business can realistically trade out of difficulty.
HMRC agrees Time to Pay where proposals are affordable, credible, and supported by evidence.
How long can a Time to Pay arrangement last and what happens if it fails?
Time to Pay arrangements typically last between six and twelve months, although longer periods may be agreed in very limited circumstances. Arrangements are usually reviewed, and HMRC expects strict compliance with both the instalments and ongoing tax obligations.
- Failure to maintain payments or meet future liabilities can result in immediate termination.
- In practice, HMRC often moves quickly to enforcement once an arrangement fails, with little appetite for renegotiation.
For companies, a failed Time to Pay arrangement can trigger winding up proceedings. For individuals, bankruptcy action may follow, particularly where arrears are significant and unsecured.
Key takeaway – A failed Time to Pay arrangement often accelerates enforcement rather than delaying it.
Can a Time to Pay arrangement stop bankruptcy or a winding up petition?
Timing is critical. Where agreed early, a Time to Pay arrangement can prevent HMRC from issuing bankruptcy or winding up proceedings. However, once formal action has begun, the position is more complex.
- HMRC may still agree to Time to Pay after a statutory demand or petition has been issued, but this is less common and usually requires immediate payment of part of the debt.
- Courts will not automatically halt proceedings simply because Time to Pay is proposed.
Relying on Time to Pay as a last minute solution is therefore risky. Early engagement significantly improves the chances of stabilising the position.
The chances of agreeing a Time to Pay are most likely to succeed before enforcement proceedings are issued.
What should directors and individuals do if HMRC refuses Time to Pay?
A refusal does not mean there are no options, but it does narrow them down. The reasons for refusal should be analysed carefully. In some cases, HMRC’s assessment may be based on incomplete or incorrect information.
For companies, alternative restructuring options may need to be considered, including formal insolvency procedures where appropriate. Directors must also be mindful of their duties once insolvency is likely, particularly where tax arrears continue to grow.
Individuals facing bankruptcy threats may have procedural or substantive defences available, depending on how HMRC has pursued the debt. Early legal advice is essential to assess risk and protect position.
A Time to Pay refusal is a warning sign. Early advice can prevent rapid escalation.
Practical guidance for managing HMRC tax pressure in 2026
Time to Pay remains a valuable mechanism, but it must be approached realistically. HMRC expects transparency, cooperation, and credible repayment proposals. Poor preparation or delay can turn a manageable situation into a crisis.
Francis Wilks & Jones advises individuals and directors on HMRC Time to Pay negotiations, enforcement action, bankruptcy defence, and winding up risk across England and Wales. Early, informed engagement often makes the difference between stabilisation and escalation.
Our team of tax experts are here to help
Our tax defence team at FWJ includes
- Andy Lynch. Andy is an expert on a wide range of HMRC claims and before joining FWJ, he spent 18 years at HM Customs & Excise in their National Investigation Service. His experience is unrivalled in all types of HMRC claims including Time to Pay Agreements, HMRC investigation defence, VAT claims, R&D tax credit defence, Account Freezing Orders, Tax Disclosure, Code of Practice 8 & 9 claims, winding up petition defence and much more.
- Anita Sharma. Anita is a Senior Associate specialising in tax litigation and financial disputes with HMRC. She advises high-net-worth individuals and major commercial clients on appeals against HMRC decisions, complex tax assessments, and enforcement proceedings. Anita has secured interim relief following HMRC revocations to keep clients trading during appeals and is known for achieving practical, results-focused outcomes in high-value disputes.
- Khaliq Martin. Khaliq is a Senior Paralegal in the tax disputes team assisting on a broad range of HMRC investigation and defence matters. Khaliq draws on his international litigation background and public sector experience to help prepare detailed evidence and submissions for use in appeals and settlement negotiations, ensuring cases are presented clearly, carefully and effectively.s
