When a person or a company can’t pay their tax debts, they can, in some cases apply to HMRC to set up a Time to Pay arrangement (‘TTP’). This provides an extended amount of time over which the taxpayer can pay their debt to HMRC.
In certain circumstances, a TTP agreement can be completed online, making it an easier and quicker process. The tax debts that are covered by the online application system are Self-Assessment (i.e. personal tax liabilities), Employer’s PAYE and VAT.
At the end of 2023, the maximum tax debts covered by an online TTP application were increased to £30,000 for individuals and £50,000 for businesses.
There are other conditions that need to be met before any application will be approved (e.g. up to date filing of tax/VAT returns, ‘age’ of tax debts etc) but in all cases, the debts must be cleared within 12 months and there must be no other payment plans or debts with HMRC.
Whilst TTP arrangements often help with cashflow issues, we would always advocate that taxpayers do not use these to paper over cracks. A need for a TTP arrangement is sometimes an indicator of more deep-routed and longer term cashflow and business sustainability issues. As always, being ‘on-top’ of cashflows is essential for any individual or business owner – we would always recommend that understanding personal or business cashflow basics is the first step.