Once you arrive at the end of a dispute with HMRC, and you may require more time to manage the arrangement of finances to meet their demand in the form of tax, interest, and penalties.

If you fail to comply with the demands for missing the payment deadlines, you could end up being hit with charges, having assets seized to pay debts and other costs. Additionally, if the situation is not appropriately addressed, HMRC can also start bankruptcy action or take funds from personal bank accounts. All of these circumstances need to be avoided – as these could cause significant reputational damage.
HMRC will facilitate the continued business operation if they continue to receive annual tax revenues. And if the taxpayer is willing to settle their liabilities over a set period instead of pursuing bankruptcy, HMRC will be open to discuss payment options. And for the individuals, the process of negotiating is referred to as ‘time to pay’ arrangements.

Qualifying for a Time to Pay Arrangement

HMRC would review the financial position of the taxpayer carefully before considering a time to pay arrangement. HMRC will do the financial checks to confirm if the taxpayer can pay back the amount in one lump sum such as, by taking a loan or releasing assets and any such requests would be verified in detail and intrusively.
HMRC will also assess a cash-flow forecast to prove that the business can afford the VAT arrears, the taxes, and penalties that may arise as part of the proposal. HMRC assess –

• If you had been provided time to pay earlier. And if yes, it could be difficult to arrange for another one.

• Your business niche, as certain sectors will have higher historical unreliability – which could be considered as a higher risk for granting time to pay.

• Your reliability and ability to meet the terms of the agreement. It could be done by assessing how well the individual or business has complied with the HMRC rules and regulations earlier.

• Appropriate alternatives if you don’t keep to the time to pay plan

The time of payment arrangement by HMRC typically lasts for 12 months, wherein the taxpayer must pay all the tax due, or else HMRC time to pay arrangement will be in default causing the loss of confidence of HMRC. Make sure to seek specialist assistance at the earliest. Contact us immediately.