A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
What is an HMRC Time to Pay arrangement?
A Time to Pay (TTP) arrangement is an agreement with HMRC to clear tax arrears in instalments - typically over six to twelve months - while keeping current liabilities up to date.
In this guide you'll learn what HMRC looks for in a proposal, how to prepare one that gets accepted first time, the typical terms for different taxes, and what happens if an arrangement fails.
A TTP is a genuine lifeline for a viable business with a temporary problem - and a trap for one that isn't - so it's a good idea to test affordability honestly before you propose anything.
When will HMRC agree to Time to Pay?
HMRC agrees TTPs where three things are credible: the debt arose from a genuine, explainable difficulty; the company is viable going forward; and the proposal clears the arrears in a reasonable period while current taxes are paid on time.
What helps: up-to-date filings, early contact (ideally before the deadline), a specific monthly figure supported by a cash flow forecast, and a clean recent compliance history.
What hurts: silence until enforcement starts, round-number offers with no workings, previous failed arrangements, and proposing instalments while other current taxes slip.
What terms can I expect?
Typical arrangements run six to twelve months, though longer terms are agreed where the case is strong; interest continues to accrue through the arrangement.
VAT and corporation tax arrears are routinely included; PAYE arrears attract shorter terms and stricter conditions, reflecting their trust-money character.
Smaller debts can sometimes be arranged through HMRC's online self-serve process; larger or multi-tax arrears mean a conversation with HMRC's debt management teams - and that's where preparation pays.
How do I prepare a proposal that gets accepted?
Build it on evidence: a 12-month cash flow forecast showing the instalments are affordable alongside current liabilities, a short explanation of what caused the arrears and what has changed, and the maximum realistic monthly payment - not the minimum you hope to get away with.
Offering slightly less than you can afford, to leave headroom for shocks, is wiser than offering the maximum and failing in month four.
Where arrears are substantial or span multiple taxes, having a licensed insolvency practitioner review the numbers first serves two purposes: the proposal is pitched credibly, and you find out early if the honest answer is that no affordable arrangement exists.
What happens if I miss a TTP payment?
A missed payment usually triggers contact from HMRC, and an unexplained default can void the arrangement - making the full balance payable and returning you to the enforcement path with less goodwill than before.
If a payment is going to be missed, call HMRC before the date, not after; arrangements are sometimes varied for genuine, temporary reasons.
A failed TTP is also information: if the business couldn't sustain the agreed instalments, the viability question needs asking properly.
What if no affordable arrangement exists?
If honest numbers show the company can't clear its arrears and pay its way, a TTP would only delay the reckoning and deepen the hole - and continuing to trade in that knowledge raises the wrongful trading issues every director should understand.
The alternatives are the formal ones: a Creditors' Voluntary Liquidation to close the company in an orderly way, or administration where a viable business can be rescued from unpayable historic debt.
Where can I get help with a Time to Pay proposal?
Call our licensed insolvency practitioners in Manchester on 0333 023 5090. We'll review the numbers with you honestly - and whether the answer is a TTP proposal or something more fundamental, you'll know where you stand after one confidential conversation.
InsolvencySupport.co.uk is operated by Xeinadin Corporate Recovery Limited (company no. 11415156), 100 Barbirolli Square, Manchester M2 3BD. Our insolvency practitioners are licensed and regulated by the ICAEW.
This article is intended for general information purposes only and does not constitute financial, legal, tax, or professional advice. HMRC's practice varies case by case - always take advice from a licensed insolvency practitioner about your specific position.
Reviewed by Alan Fallows, Licensed Insolvency Practitioner, ICAEW.