Time to pay agreements

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A time to pay agreement allows a business to settle its tax liabilities through instalments rather than paying the amount in full. HMRC will only agree to a payment plan if it believes the proposal is realistic and supported by accurate financial information. Early advice is essential to present a credible plan and avoid further enforcement action.

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At a glance

HMRC uses time to pay agreements to help businesses manage temporary cash flow difficulties. A successful proposal requires clear financial evidence, full disclosure and a repayment plan that the business can sustain. We help companies prepare negotiation strategies, present evidence to HMRC and agree arrangements that protect trading and cash flow.

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What is a time to pay agreement with HMRC?

A time to pay agreement is an instalment arrangement made directly with HMRC. It allows a business to repay tax arrears over an agreed period. HMRC reviews each request individually and will only agree to a plan if it is satisfied that the business can meet the payments and remain compliant going forward.

Time to pay can cover most types of tax, including VAT, PAYE and corporation tax. The arrangement is formal and must be followed precisely. If the business defaults, HMRC may take enforcement action without further notice.

Summary: Time to pay allows a business to repay tax arrears in instalments, subject to HMRC’s approval and conditions.

When will HMRC consider a time to pay arrangement?

HMRC will consider a time to pay request when the business is experiencing temporary financial difficulty but can demonstrate that it is still viable. HMRC assesses the company’s compliance history, filing record, past payment behaviour and the reasons for the arrears.

Requests made at an early stage are more likely to succeed. HMRC may be less willing to agree terms if the business has ignored previous correspondence or has a history of missed payments.

Summary: HMRC considers time to pay where the business is viable and has engaged early and honestly.

What information does HMRC need before agreeing a payment plan?

HMRC requires detailed evidence before agreeing to a time to pay arrangement. This usually includes:

• current management accounts
• cash flow forecasts
• a schedule of creditors
• explanation of the financial difficulties
• confirmation that future liabilities will be filed and paid on time

HMRC expects full disclosure of the company’s financial position. Any gaps or inaccuracies can lead to refusal or early termination of the agreement.

Summary: A credible time to pay proposal depends on accurate financial information and full transparency.

How do you negotiate a realistic time to pay agreement?

Successful negotiation involves careful preparation. The business must assess what it can afford, based on evidence, and propose a repayment plan that is achievable. HMRC expects honesty about financial difficulties and a clear plan showing how the business will return to compliance.

Engaging with HMRC in a clear and structured way improves the chances of agreement. Professional representation can help present the financial evidence and negotiate terms that are manageable.

Summary: A realistic proposal must be well prepared, evidence based and commercially achievable.

How long do time to pay agreements usually last?

Most arrangements last between six and twelve months, although longer terms may be agreed in exceptional circumstances. The duration depends on the level of arrears, the business’s financial position and HMRC’s assessment of affordability.

Longer term arrangements must be supported by strong evidence and a detailed explanation of why shorter repayment periods are not realistic.

Summary: Time to pay arrangements are usually short term, but longer agreements may be possible with the right evidence.

Can you get a time to pay agreement for VAT, PAYE or corporation tax?

Yes. HMRC may agree to time to pay arrangements for most business taxes, including VAT, PAYE, corporation tax, CIS liabilities and other business-related tax debts. HMRC will expect future returns to be filed on time and for all new liabilities to be paid as they fall due.

A history of missed VAT or PAYE payments may make negotiation more difficult, but not impossible where clear evidence supports the proposal.

Summary: HMRC accepts time to pay for most business taxes provided future compliance is maintained.

What happens if HMRC refuses a time to pay request?

If HMRC refuses the request, it may begin enforcement action. This can include collection action, security notices, statutory demands or, in serious cases, an application for a winding up petition.

A refusal does not always mean the end of negotiations. You may be able to provide additional evidence or request a review. In some cases, professional intervention can help secure an agreement after refusal.

Summary: A refusal increases the risk of enforcement, but further negotiation may still be possible.

What are the consequences of failing to keep to a time to pay agreement?

If the business misses a payment or fails to file returns on time, HMRC may treat the agreement as breached. HMRC may then take immediate enforcement action without offering further negotiation. This can include recovery action, security notices or winding up proceedings.

Directors must monitor compliance closely and ensure that payments are made on time.

Summary: Defaulting on a time to pay arrangement can lead to immediate enforcement action.

Can you request a time to pay arrangement after HMRC has taken enforcement action?

It may still be possible to agree a time to pay arrangement after HMRC has taken steps such as issuing a statutory demand or initiating legal action. However, HMRC will expect full financial disclosure and a clear repayment plan. The later the request is made, the more evidence HMRC will require.

In some cases, time to pay may be agreed to avoid escalation to a winding up petition or insolvency proceedings.

Summary: Late-stage agreements are possible but require strong evidence and early engagement.

How does FWJ help businesses negotiate time to pay arrangements?

We help businesses prepare the financial evidence required for time to pay, engage with HMRC on their behalf and negotiate terms that reflect commercial realities. We also advise on compliance, future tax planning and director duties. Our approach is practical, focused and tailored to the financial position of the business.

Summary: FWJ provides clear and experienced support to help businesses secure manageable time to pay agreements.

“FWJ did precisely what it set out to do. I am extremely grateful for its assistance.”

A client who had received a Request for Security from HMRC for a sum that would have caused their company severe financial difficulties. We helped them to have the entire bill withdrawn

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At Francis Wilks & Jones we regularly act for directors and individuals who need assistance exploring these options, including negotiating a time to pay arrangement with HMRC.  We can also assist and advise on restructuring issues and whether there is an alternative to the time to pay arrangement as described above. Should you require any assistance, please contact our Director Services team who can discuss such matters with you.