Managing Tax Payments with Time to Pay

Managing Tax Payments with Time to Pay

Paying your taxes on time is a requirement by HM Revenue & Customs (HMRC), but what if you’re struggling to make full payment? Don’t worry – HMRC offers a solution called Time to Pay, which allows you to spread your tax costs over an agreed period, making it easier to manage your cash flow.

How Time to Pay Works

If you need more time to pay your tax bills, Time to Pay could be the answer. You can request this arrangement for several types of taxes, such as:

• Self-Assessment Tax
• Employer’s PAYE
• VAT

For some taxes, you can apply online using HMRC’s “self-service” system. However, if you’re dealing with a different tax type or the conditions for online requests aren’t met, you’ll need to contact HMRC directly.

The easiest way to discuss your options is by phone at 0300 200 3835. When speaking to an HMRC agent, they’ll ask about all taxes you owe, your income and expenses, and any savings or assets that could help reduce the amount you owe. If you reach an agreement during the call, they will likely set up a Direct Debit for the payments.

Using the Self-Service System

For straightforward cases, the self-service system may be the fastest route. Here’s what you need to know:

• Self-Assessment: Apply within 60 days of the payment deadline if you owe £30,000 or less.
• Employer’s PAYE: The debt must be no more than 5 years old, under £50,000, and all PAYE and CIS returns must be submitted. You can spread the payment over a maximum of 12 months.
• VAT: Apply within 28 days of the due date if you owe no more than £20,000. Note: You cannot use self-service if you are on cash accounting or the annual accounting scheme.

While the self-service system makes the process easier, it’s important to remember that HMRC is not obligated to offer this arrangement. If you fail to pay your taxes, HMRC can take legal action, including court proceedings or bankruptcy.

How We Can Help

The best way to avoid tax stress is to stay ahead of it. Working closely with your accountant allows us to forecast your tax liabilities and avoid unpleasant surprises.

If unexpected financial pressures arise, setting up a Time to Pay plan is the sensible way to manage your debt. Ignoring your tax obligations can lead to severe penalties and legal consequences.

Contact us today to discuss how a Time to Pay arrangement can work for you!