Everyone likes to make sure all their taxes are paid on time, and while HMRC also expects this they do understand that sometimes you just aren’t able to. This could be due to a sudden unexpected cost, waiting on a customer to pay a large invoice or just a drop in cashflow. But don’t worry, HMRC do have options in these situations and offer Time to Pay arrangements that allow you to pay off your tax in instalments.
So how does Time to Pay work? Time to Pay arrangements can be set up for a multitude of taxes including self-assessment, PAYE, VAT, and corporation tax. To set a time to pay arrangement up you will need to contact HMRC to discuss your situation and go from there. It is not guaranteed that you will be granted a Time to Pay arrangement and it would all depend on your circumstance. The easiest way (albeit not the quickest) is to give HMRC a call on 0300 200 3835. Should an arrangement be reached HMRC would then require you to set up a direct debit over the phone.
However, HMRC have also recently introduced a new ‘self-serve’ system that allows you to set up Time to Pay arrangements online. There are certain conditions with this method, the first is that you do not have any other payment plans or debts with HMRC. The remaining conditions are dependent on the tax you owe and are as follows:
- Self-assessment: you must apply within 60 days of the payment deadline and owe less than £30,000.
- PAYE: you must apply within 35 days of the deadline, owe less than £15,000 and have no outstanding penalties.
- VAT: you must apply within 28 days of the due date and owe less than £20,000. You can’t apply through the self-service method if you are using cash accounting or annual accounting schemes for VAT.
If you need more advice on getting a time to pay arrangement or help to manage your tax affairs to avoid any potential issues, get in touch with us.