The Time to Pay (TTP) service, which HMRC has recently injected serious resource (2,000 experienced call handlers) into, can be used by businesses to negotiate payment terms for tax and related penalties with HMRC directly.
Businesses must bear in mind that there are blanket deferrals in VAT and Income Tax payments due in the coming months for all businesses and individuals. Even so, we expect some businesses will require further help with deferring tax payments and managing the potentially penal outcome of missing tax payment deadlines, for example on corporation tax and payroll taxes as well as on CGT for Residential Property sales due within 30 days from 5 April 2020.
Feedback early into lockdown was HMRC were struggling to cope with the demand for this service, and we heard of some waiting hours on hold to get through, this has certainly relaxed, and HMRC is fielding calls well, with almost certainly a large amount of their team working from home.
Due to the possible delays, ideally in advance of calling, we have some top tips for you to read.
To set the scene, TTP is in our experience commonplace for businesses who may need help with one-off cash flow issues: perhaps those with a large bad debt, or unexpected tax outcomes in an enquiry. Generally, TTP will be agreed one or two weeks before the tax payment falls due, which is not appropriate now when businesses may require certainty overpayments due in a few months’ time. Payments over £100,000 or to be spread over more than one year may require extra sign off internally within HMRC in our experience.
The service is generally beneficial though to those up to date with HMRC and who could make an agreement in advance of incurring late payment penalties which are waived where a TTP arrangement is in place before they are triggered and can be negotiated at that time with relative ease.
Be aware of the limitation of TTP arrangements which is that they are agreed on a case by case. There is plenty of scope for large variations of outcome even for the same scenario because of the requirement for the two sides with inherent biases and differing capabilities ‘striking a deal’.
TTP is sometimes best agreed with an inspector handling a particular case or enquiry for a business rather than via the TTP helpline, and this may also be the case rather than using the specific COVID-19 helpline for HMRC 0800 0159 559.
If TTP is going to be an important part of your financial plan, then our top tips are as follows:
- prepare your cash flow in advance of the call, considering all of the automatic tax deferrals already announced by the Chancellor,
- prioritise the payment of PAYE and VAT which HMRC have historically considered as being collected for them by business rather than profit-based taxes such as corporation tax and income taxes,
- ensure you understand what’s best for your business in advance, and take advice from your accountant or finance team because you should expect robust questioning,
- if you have a dedicated customer manager (large corporates and HNWs typically do), then contact those people who will be more familiar with your affairs,
- having up to date filings with HMRC will always help demonstrate compliance and knowledge of the quantum of tax to have the payment deferral discussion,
- it’s OK to walk away – no deal may be better than a bad deal, is something we have heard a lot in the past years during Brexit negotiations but rings true for businesses which should not accept terms which are onerous as part of TTP it may be worth reconsidering the cash flow forecast and better options for making payment of tax alternatively, and
- repeat offenders are very rarely given the best terms! If you have a history of late filing or late payment, it is unlikely that HMRC will extend those outstanding items and indeed enter into new agreements under TTP willingly. The better option for such businesses may be to look elsewhere.
Corporation tax, freezing debts and deferrals of up to three months on due amounts is also available but will be reviewed on a case by case basis.
Our recent experience indicates that call wait times have reduced significantly and the HMRC team are very supportive once you’re through.
If you would like to talk to one of our team about Time To Pay services, then please feel free to get in touch with your usual PB contact, or Richard Grimster from our Tax team and Tim Smith from our Recovery and Turnaround team.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.