What is an HMRC Time to Pay Arrangement?

A HMRC Time to Pay (TTP) arrangement is a formal agreement between your company and HMRC that allows you to spread overdue tax payments over an agreed period, typically up to 12 months, though longer arrangements are possible in some circumstances. It is one of the most practical options available to companies struggling with tax debt, and it is an option HMRC will generally consider before pursuing more formal enforcement action including forcing your company into compulsory liquidation.

A Time to Pay arrangement does not write off the tax debt you owe, but it does provide breathing space by replacing immediate demands with a structured, manageable repayment plan. If your company can't pay VAT, PAYE, Corporation Tax, or any other HMRC liability, a Time to Pay arrangement may allow you to continue trading while clearing the debt over time.

 

 

 

HMRC Time to Pay — at a glance

Which taxes can be included in a Time to Pay arrangement?

A TTP arrangement can cover most types of HMRC tax debt owed by a limited company, including:

• VAT — including deferred VAT arrears and penalties
• PAYE and employer National Insurance Contributions — including arrears of payroll taxes
• Corporation Tax — including overdue payments on account
• Construction Industry Scheme (CIS) deductions
• Self Assessment tax (for sole traders or directors with personal tax liabilities)

It is possible to include multiple tax liabilities within a single Time to Pay arrangement, giving you one consolidated monthly payment rather than dealing with each debt separately. This is often the most practical approach where a company has accumulated arrears across several tax heads simultaneously.

How do I apply for a Time to Pay arrangement?

Time to Pay arrangements need to be negotiated directly with HMRC. You can do this yourself or alternatively an insolvency practitioner will be able to help handle these negotiations on your behalf. Before you make contact with HMRC, it helps to have the following to hand:

• Your company's UTR (Unique Taxpayer Reference) and VAT registration number if applicable
• A clear breakdown of how much is owed for each tax head and when it became due
• Up-to-date management accounts or a recent set of filed accounts
• A cash flow forecast showing how the proposed repayments will be funded
• A specific proposal detailing how much you can pay each month, for how long, and when the first payment can be made

HMRC will want to understand why the debt arose, whether the underlying problem has been addressed, and whether the company is genuinely viable. Coming to the negotiations with a credible, realistic proposal, rather than asking HMRC to suggest the terms themselves, significantly improves the likelihood of successfully agreeing a Time to Pay plan.

If your company's affairs are complex, or if HMRC has already begun enforcement action against your business, it may be worth having a licensed insolvency practitioner negotiate on your behalf. They will know what HMRC considers acceptable and can help structure a proposal that is more likely to be agreed.

What if my company cannot pay its PAYE?

Falling behind on PAYE and employer National Insurance Contributions is one of the most common tax problems directors face, and one HMRC takes seriously. Unlike VAT, where a single quarterly return can create a large one-off liability, PAYE arrears tend to accumulate monthly, often because cash flow problems lead directors to prioritise other creditors over HMRC.

HMRC can and does include PAYE arrears within a Time to Pay arrangement. The key requirement is that you are keeping current PAYE payments up to date, meaning you are paying each month's new PAYE liability on time, while repaying the arrears under the Time to Pay. HMRC is unlikely to agree to a Time to Pay if your company is continuing to fall further behind while asking for time to repay historic debt.

If your company genuinely cannot meet its PAYE obligations on an ongoing basis, not just the arrears, but each month's new liability, this is an important signal that the company's financial position may be more serious than a Time to Pay can address. In this situation, speaking to a licensed insolvency practitioner about your wider options is strongly advisable.

Can HMRC tax debt be written off?

This is one of the most common questions directors ask when they speak to us here at UK Liquidators. Unfortunately HMRC does not write off company tax debts as a matter of general policy, however, a well-negotiated Time to Pay arrangement can give your company the time and breathing space it needs to fully clear the debt and get itself back on a solid financial footing.

In practice, the only route through which HMRC tax debt is written off in any meaningful sense is through a formal insolvency process. In a Creditors' Voluntary Liquidation (CVL), HMRC ranks as a creditor in the distribution of the company's assets. If those assets are insufficient to repay the tax debt in full, which is common, the remaining balance is written off as part of the liquidation process. In essence, the company's tax obligations end when the company ceases to exist.

A Company Voluntary Arrangement (CVA) can also result in HMRC agreeing to accept less than the full amount owed, as part of a formal agreement approved by creditors. This is different from a write-off as HMRC is agreeing to a reduced settlement rather than writing off the full outstanding balance.

What happens if I miss a Time to Pay payment?

Missing a payment under a Time to Pay arrangement is serious and you should make every effort to keep up with your side of the agreement. Remember, HMRC does not need to give you additional time to pay your tax debts, and therefore missing an agreed payment, or failing to keep up with current tax obligations alongside the Time to Pay, will almost certainly cause the arrangement to default.

Once a Time to Pay defaults:

1.    HMRC will typically write to you to notify you that the arrangement has been cancelled.

2.    The full outstanding balance becomes immediately payable, not just the missed instalment, but the entire remaining debt under the arrangement.

3.    HMRC can then pursue enforcement action without further negotiation, which may include issuing a winding up petition, instructing bailiffs, or applying for a charging order against company assets.

4.    Any goodwill built up through previous payments and cooperation is largely lost. HMRC is much less likely to agree to a second Time to Pay arrangement after a default.

If you know in advance that you are going to miss a payment, contact HMRC immediately, before the payment date, not after. HMRC may be willing to adjust the arrangement if you approach them proactively with a clear explanation and a revised proposal. This is far preferable to simply missing the payment and waiting for HMRC to act.

If a Time to Pay has already defaulted and HMRC is pursuing enforcement, taking professional advice at this stage is essential. Depending on how far enforcement has progressed, there may still be options but the window to act narrows quickly.

What if a Time to Pay arrangement is not enough?

A Time to Pay arrangement works best where the company's underlying trading position is viable, where the tax debt is a historic problem that has been resolved, and where the company can genuinely afford the proposed repayments while meeting its ongoing obligations. Where these conditions are not met, a Time to Pay may provide temporary relief but is unlikely to resolve the underlying situation.

If your company is in a position where HMRC debt is simply one part of a wider financial problem where you are experiencing mounting creditor pressure, an inability to pay wages or suppliers, or not generating enough cash to sustain itself, then you may need to consider ways of restructuring or liquidating the business. The good news is that it is possible to close a company with outstanding HMRC debts. The options worth exploring include:

• Creditors' Voluntary Liquidation (CVL) — if the company is insolvent and closure is the most realistic outcome, a Creditors’ Voluntary Liquidation allows directors to wind the company up in an orderly way, with HMRC's debt written off alongside other unsecured creditor debts on dissolution.
• Company Voluntary Arrangement (CVA) — if the business is viable but needs a formal restructuring of all its debts, a CVA allows a company to continue trading while repaying creditors — including HMRC — under a court-supervised agreement over a fixed term.
• Company Administration — where the company needs immediate court protection from creditor action while a rescue or restructuring plan is developed.

The earlier you seek advice, the more of these options are likely to remain open. Many directors wait until HMRC has already issued a winding up petition before taking professional advice at which point the choice of routes is considerably narrower.

How UK Liquidators can help

We speak to directors dealing with HMRC debt every day. Whether you are exploring a Time to Pay arrangement for the first time, have had a Time to Pay refused or defaulted, or are facing HMRC enforcement action, we can help you understand your options clearly and take the right next step.

All insolvency practitioners at UK Liquidators are fully licensed and regulated. We offer a free initial consultation with no obligation, operate from over 100 offices across the UK, and treat every conversation as strictly confidential.

Frequently asked questions

Will HMRC always agree to a Time to Pay arrangement?

HMRC will assess each Time to Pay application on its merits and success is not guaranteed. They will want to understand why you have fallen behind on your tax obligations, whether your company is genuinely viable, and whether the proposed repayments are realistic. If HMRC concludes that the company cannot sustain the repayments or that granting a Time to Pay would simply delay an inevitable insolvency, they may refuse. A well-prepared proposal, with supporting cash flow forecasts and a credible explanation of how the company's position has stabilised, gives you the best chance of agreement.

Can I negotiate a Time to Pay arrangement myself or do I need a professional?

You can negotiate directly with HMRC yourself, there is no requirement to use an adviser. However, if the debt is substantial, if HMRC has already begun enforcement action, or if the company's financial position is complex, having a licensed insolvency practitioner or tax adviser negotiate on your behalf can make a meaningful difference. They will understand what HMRC considers acceptable, how to frame the proposal, and how to handle objections.

Does a Time to Pay arrangement affect my company's credit rating?

A Time to Pay arrangement is not publicly registered and does not appear on your company's credit file in the same way that a County Court Judgment or insolvency would. However, if HMRC has already registered a tax charge against the company or filed a winding up petition before the Time to Pay was agreed, those actions may already have impacted your credit profile. Agreeing a Time to Pay and adhering to it will not undo that but it does demonstrate to HMRC that you are engaging constructively.

Can HMRC change the terms of a Time to Pay arrangement once it is agreed?

Generally, once a Time to Pay arrangement is agreed and you are meeting the payments, HMRC will not change the terms. However, HMRC can cancel the arrangement if you miss a payment, fail to keep current tax obligations up to date, or if it comes to light that information provided during the negotiation was inaccurate. If your circumstances change significantly and you are struggling to maintain the agreed payments, contact HMRC proactively to discuss a revised arrangement before defaulting.

What is the difference between a Time to Pay arrangement and a Company Voluntary Arrangement?

A Time to Pay arrangement is an informal agreement between your company and HMRC alone; it only covers HMRC debt and has no legal standing beyond the agreement itself. A Company Voluntary Arrangement (CVA) is a formal, legally binding insolvency procedure that covers all unsecured creditors, not just HMRC. A CVA requires the approval of creditors holding 75% of the debt by value and is supervised by a licensed insolvency practitioner. It can result in creditors - including HMRC - agreeing to accept less than the full amount owed, whereas a TTP only reschedules repayment of the full debt.