HMRC has issued guidelines on their position regarding ‘Time To Pay’ proposals in light of the current Covid-19 crisis
A Time to Pay (TTP) Arrangement with HMRC is an agreed debt repayment plan for your outstanding taxes. Companies that are likely to miss or have missed payments to settle their Corporation Tax, VAT and/or PAYE can ask HMRC for extra time to pay. Depending on individual circumstances HMRC will usually agree that you can pay it back over 6-12 months.
While in recent times HMRC have taken quite a hard line on defaulted payments the current crisis will undoubtedly lead to more companies struggling to meet their tax obligations and the HMRC may need to adjust their approach. As a result the HMRC have issued the following guidelines:
HMRC Guidelines on – Time To Pay (TTP) proposals
A TTP proposal should be made in writing as it allows those submitting the opportunity to provide as much supporting detail as necessary to obtain approval.
Standard information to be provided would include –
- Description of the business;
- Annual total liability to tax;
- Details of the nature and amount of tax to be deferred by instalment;
- A short-term cashflow forecast (particularly if the request is for an amount greater than £750,000); and
- The reasons why the request is being made (specifically the direct link to COVID-19)
Additionally, to support a TTP proposal, HMRC would want to see the following in some form –
- Details of the measures the company has implemented to allow it to pay the debt as quickly as possible (in particular, if the company has applied for and received support via any other government scheme);
- An explanation of the parts others have played in ensuring the company presents the best proposal possible;
- An explanation of the other funding options explored before seeking TTP (e.g. via banks, other lenders, shareholders, directors etc);
- Any information to support why HMRC should provide support and take an element of risk when others are not willing to invest or inject capital into the company.
Isobel Brett, Bretts Business Recovery, said “Formal acknowledgement by the HMRC that companies will find themselves trading in a very different financial environment now and post lockdown is reassuring and will ultimately lead to further work by the HMRC to determine what kinds of TTP proposals they will now except. The HMRC are expected to make further announcements in due course.”
If you’re concerned about cashflow or uncertain of what actions you should take next to protect yourself and your business, please contact us. As specialists in business recovery, we can advise you on the best options for your business, call our dedicated freephone support number 0808 168 7540 or email us at firstname.lastname@example.org.