Are you facing financial difficulties and struggling to pay your debts to HM Revenue and Customs (HMRC)? If so, it’s important to know that you’re not alone. The good news is that options, such as Time to Pay Arrangement (TTP), can help you organise your finances and pay your debts more manageably.
A TTP is an agreement between you and HMRC that allows you to pay your debts over a longer period in instalments that suit your financial situation. TTPs are typically used for tax-related debts, such as income tax, corporation tax, and VAT. If you’re struggling to pay these debts, a TTP could be the right solution for you – consult a professional like Accountants East London to create an accurate proposal.
In this article, we will take a closer look at TTPs, what they are, how they work, and how to apply for them. We’ll also cover some important details to remember when negotiating a TTP with HMRC. By the end of this article, you’ll better understand how to get financially organised and pay your debts to HMRC in a manageable way with the help of a TTP.
How to Set Up an HMRC Time to Pay Arrangement?
As mentioned above, if you’re struggling to pay your tax-related debts, setting up a Time to Pay Arrangement with HMRC can be a helpful solution. Here’s a step-by-step guide on how to set up a TTP with HMRC.
Step 1: Get in touch with HMRC
The first step in setting up a TTP is to contact HMRC as soon as possible. Simply ignoring your debts or waiting for HMRC to chase you will only make the situation worse. Contact the HMRC debt management helpline to discuss your situation with a debt advisor.
Step 2: Provide the required details
During the conversation with the debt advisor, you must provide details about your financial situation. This may include your income, expenses, and other debts. Based on this information, HMRC will assess whether you’re eligible for a TTP.
Step 3: Negotiate the arrangement
If you’re eligible, the next step is negotiating the TTP arrangement. This involves agreeing on the amount of debt you’ll repay each month and the length of the TTP. The agreement will be tailored to your circumstances and consider your income and expenses.
Step 4: Stick to the agreement
Once you’ve set up your TTP, it’s important to stick to your agreement with HMRC. This means making your agreed payments on time and in full. Failure to make your payments could result in legal action against you.
Reasons Why Your TTP May Get Declined
If you’re considering a Time to Pay Arrangement (TTP) with HM Revenue and Customs (HMRC), it’s important to be aware of why it may be declined. This can help you ensure your application is as strong as possible, increasing the chances of acceptance.
Firstly, suppose you have yet to be honest about your financial situation or have withheld information from HMRC to increase your chances of getting approved for a TTP, then this will likely result in your application being declined.
Secondly, if you cannot demonstrate that you can make payments on time and in full according to the arrangement, this could also lead to a declined application. HMRC considers other debts when assessing TTP applications and won’t accept an agreement that they deem unsustainable.
Thirdly, if there is evidence of deliberate non-payment or tax evasion, this will almost certainly lead to the application being declined. It’s important to remember that HMRC has access to all kinds of taxpayer data and will take any signs of avoidance or fraud seriously.
Finally, suppose you’ve violated any existing Time to Pay agreements with HMRC before or defaulted on another form of debt within the last six months. In that case, it’s unlikely that they’ll approve your application.
Therefore, to increase the chances of your TTP being accepted by HMRC, be upfront about your financial situation and demonstrate an ability to pay back what you owe on time and in full for the duration of the agreement.
What Happens if You Miss an Instalment?
If you miss an installment for your HMRC Time to Pay Arrangement, then you could be at risk of being penalised. HMRC can charge interest on the outstanding debt, and you may also incur penalties for late payment. If you continue to miss installments despite reminders and requests to pay, then HMRC may take legal action against you. It’s essential to prioritise payments of TTP installments to avoid these types of consequences, as the result of legal action is increased financial burdens.
Bottom Line
Taking time to pay one’s debt is an essential duty of any responsible taxpayer. With the help of a Time to Pay Arrangement, this duty can be fulfilled, and a person can get organised about paying their debt to HMRC. The TTP process is quite simple if all the criteria are met. However, failure to meet these criteria or missing even a single installment may lead to HMRC declining the arrangement or imposing possible penalties. Consequently, taxpayers need to understand their options clearly and familiarise themselves with TTP rules before they agree.
