Negotiating time to pay with HMRC

A time to pay agreement with HMRC is an arrangement whereby the taxpayer can seek agreement with HMRC to defer an immediate requirement for tax arrears or demands to be paid, to be replaced by instalment arrangements. This will bring any enforcement action to an immediate standstill whilst you repay all of the liability owed to HMRC. A time to pay agreement will have to be managed at the same time as current tax liabilities and will not normally extend for longer than 12 months.

• HMRC will not always agree a time to pay agreement.
• it is very unusual to agree this where a previous time to pay agreement has been entered into (regardless as to whether all obligations were paid or not under that agreement).

If a time to pay agreement is entered into, it is considered to be an exceptional circumstance which HMRC will only agree if it is satisfied that no further tax liabilities will accrue and the agreement can be properly managed in addition to current period tax liabilities. Such agreements cannot and should not be repeatedly sought.

Most importantly, for your business’ cash flow, is whether you can continue to adhere to the terms of the time to pay agreement whilst also meeting your current trading obligations (including taxes arising on current and future period trading activities).

If this is too onerous, you (either as an individual or as a director);

• face grave personal risks in entering into a time to pay agreement;
• can face claims by liquidators or administrators against the directors;
• can lead to director disqualification and compensation claims.

Accordingly, a time to pay agreement should only be proposed on the basis of detailed cash flow forecasts and on the basis of solid assurances as to your business’ future performance.

At Francis Wilks & Jones we have considerable experience of negotiations with HMRC, including time to pay arrangements, claims by liquidators and defending director disqualification claims.