In short:
HMRC can provide monthly payment plans to businesses struggling to pay tax bills in one go.
Having a specialist negotiate on your behalf significantly increases your chances of securing a good deal.
Agreeing to larger monthly payments than you can comfortably pay can eventually lead to financial problems.
If your business is struggling to pay its corporation taxes, PAYE or VAT, an HMRC Time to Pay Arrangement is a means of giving it more time to pay its debts.
When cash flows dry up, it’s inevitably taxes such as VAT or PAYE that suffer from missed payments first. But this is a dangerous situation to be in.
HMRC don’t take to missed payments kindly and have a number of methods available to them to claim unpaid taxes, including the hiring of bailiffs and recovery agents. Should worst come to worst, they even have the power to petition for the permanent closure of your business.
So, what should you do if you find yourself faced with an HMRC bill that your business can’t possibly afford?
Your first port of call should always be to look at the possibility of securing a Time to Pay arrangement.
What is a Time to Pay arrangement?
One of the main issues with HMRC debts is that they usually arrive as one large lump sum to be paid in full. With an HMRC Time to Pay arrangement (TTP), however, you can repay debts to HMRC in monthly instalments instead.
HMRC can be a little reticent about their ability to offer these, and don’t tend to like to offer anything over a 12-month payment period (if they offer anything at all).
However, with the right negotiation, some Time to Pay agreements can be arranged that span much longer. Forbes Burton’s TTP expert, Nicholas Troth, explains that he’s “routinely able to double the payment period to 24 months, and in some special cases, even over three years, but these are much trickier to secure”.
As you might expect, the ability to spread HMRC bills that can often total hundreds of thousands of pounds over a couple of years instead can be a godsend to many businesses. “One of most recent cases was a negotiation on a £350k tax bill. Securing a lengthy Time to Pay arrangement there was literally the difference between the company surviving or folding” adds Troth.
Negotiating a Time to Pay arrangement with HMRC
If you decide to speak to HMRC yourself about a TTP arrangement, you should be prepared to provide information about your company’s financial status.
They’ll want details on why the bill cannot be paid in full as well as how much you can afford to pay.
HMRC may put pressure on you to accept a larger monthly payment over a shorter period, but it’s important that you’re not swayed into accepting payment plans that don’t work for you. Before you ring, you should go over your finances to determine what you can safely afford to pay each month.
Troth explains that “exaggerating this figure or accepting a payment higher than this will only make it more likely that your business will eventually become insolvent.”
We would always recommend that you use a professional service to negotiate on your company’s behalf. While it’s not impossible for business owners to secure a good TTP deal, we’ve found that our specialist negotiators are able to secure far, far better arrangements in the vast majority of cases.
If you’ve already attempted to arrange a TTP deal but it hasn’t worked out as well as you hoped, you can still speak to one of our specialists who may be able to negotiate it down into something more manageable.
What to expect if you call
When you contact HMRC, they’ll also assess the long-term viability of your company and the probability of a successful TTP plan.
The adviser you speak to will use this call to inform and advise you of your rights. They may also mention the penalties you could incur should you go against the arrangement or provide false information.
During your call with HMRC they may ask you about:
Other debts the business owes HMRC.
Tax repayments owed to the business.
The company’s financial position (including how you expect its finances to change in the future).
The efforts made to raise the funds against the debt.
Bank account details, so that a Direct Debit can be set up (the caller will need the authority to set up a Direct Debit on that account)
Do you qualify for a Time To Pay arrangement?
If you’re struggling to pay your HMRC tax bill, you may be able to get a Time To Pay arrangement.
Find out if you qualify with our free online test →
Paid alongside new tax debt
All ongoing HMRC commitments will still need to be taken care of.
It’s worth noting that any TTP payments will have to be made alongside any new or current payments to HMRC. This should be kept in mind when you’re looking at whether you can afford the plan.
Tax returns must continue to be filed promptly during the payment period of your TTP also. Failure to do so can invalidate any agreement in place.
How long are Time to Pay arrangements?
There’s no set timeframe for Time to Pay arrangements to follow.
In general, though, HMRC tends to try to keep such payment plans to a 12-month period. That’s not to say that it can’t be longer than that, however.
A professional negotiator should be able to double or even treble the length of time allowed to repay the bill in some cases. We’ve secured several agreements over the three-year mark, for example.
Every case is unique in its needs and problems, and as such, it’s difficult to give a ballpark figure of what you can expect. We do find, though, that our specialists are able to routinely negotiate far better deals than our clients do attempting it on their own.
If you think that you may need more than a year to pay back the debt, then get in touch with us today on 0800 060 8446
Can a TTP agreement be broken by HMRC?
According to law, HMRC cannot break Time to Pay arrangements except under exceptional situations. For example, there may be scope to void an agreement if significant changes are made to the company that renders it unfit for a TTP arrangement.
The most common reason for TTP agreements to be cancelled is the uncovering of false information. Troth adds that “should HMRC feel they have been misled by the details given when a company applies for a TTP arrangement, they can terminate the payment plan with immediate effect.”
Of course, they are also able to cancel agreements should the company default on their instalment payments or fail to file their reports on time. HMRC will usually try to receive payment at least three times beforehand, but if unsuccessful, they will threaten the use of enforcement agents.
What if there are still problems with the business?
Time to Pay arrangements are generally intended for businesses that are seen to have temporary financial issues. Those with question marks over their future viability may be better suited to something different.
Having an alternative recovery plan may be more suitable if the debts owed are large or there are other creditors besides HMRC.
Case study
After undergoing operational changes and a management restructure, our client, an office renovation firm, found themselves operating at a loss for a short spell.
Their cash flow was inevitably stretched in the process and things only got trickier when an HMRC bill of £200k landed on their doormat.
The director correctly took prompt action and spoke to HMRC right away. Unfortunately, his pleas fell on deaf ears, and HMRC refused to offer any sort of payment plan.
According to TTP specialist Nicholas Troth, such instances are far from uncommon, “from HMRC’s point of view, a struggling company is a huge risk, and one that they’re not always keen on helping” he explains. “After all, helping a struggling company to reach another year of trading opens up the possibility for more debt owed to them.”
Despite this, Forbes Burton was able to utilise its strong working relationship with HMRC to secure a great deal for its client. On looking at the client’s financial situation, we decided that even a 12-month plan would be too difficult for them to keep to.
“Happily though, we were able to secure a 36-month agreement that will see the company pay a far more manageable £5,500 per month” says Troth. “At this amount, the debt could be absorbed into other outgoings without impacting upon their ability to pay for other commitments”.
The usual requirements of a Time to Pay arrangement
You will have to provide a realistic proposal regarding the amount your company can afford each month.
HMRC needs to be satisfied that you don’t have the means to pay your tax bill by its due date.
The instalments should be paid over the shortest time frame reasonably possible.
A TTP arrangement is intended to give businesses experiencing short term cash flow problems more time to make payments, not for companies wishing to use the money somewhere else.
If the financial circumstances of the company changes in any way, either positively or negatively, HMRC must be notified immediately.
The decision by HMRC is based on risk, so they may need additional information before arriving at a conclusion if they suspect a greater amount of risk.
Do HMRC charge interest on Time to Pay arrangements?
As of August 2025, the interest rate on TTP arrangements is set at 8%.
This rate regularly changes in line with the Bank of England base rate and is determined by adding 4% to whatever the base rate is at the time.
How Forbes Burton can help you if you are struggling with HMRC tax arrears
If your company is behind with its HMRC bills, we can advise you if a TTP arrangement would work for you and help you put one into place.
Time to Pay arrangements may be a viable option for tax arrears, but there are other alternatives you can explore which are sometimes more suitable.
Contact us on 0800 060 8446 or find out if you qualify for a Time To Pay Arrangement with our quick online test →
