Tax Time to pay arrangements

Last updated 22 March 2020

In the Budget, the Chancellor announced that HMRC would scale up its Time To Pay (“TTP”) service, giving businesses (including the self-employed) the chance to defer tax payments.

HMRC now has up to 2,000 staff available on a phone helpline to assist businesses who are concerned about meeting their tax liabilities due to Coronavirus.

These staff are available to discuss your specific circumstances to explore:

• Allowing deferment of Corporation Tax, PAYE, NIC and other taxes under a TTP Arrangement
• Suspending debt collection proceedings
• Cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately

As announced on 20 March a TTP Arrangement will not be required for VAT, at least in the short term, as HMRC will not require any VAT payments to be made in the period 20 March 2020 until 30 June 2020. This is an automatic offer and no applications are necessary. Businesses will have until the end of the current tax year to clear any liabilities that accumulated during the deferral period. VAT refunds and reclaims will continue to be paid by HMRC in the normal way.

There are new specific rules relating to Payments on Account of Income Tax and National Insurance for the self-employed.

Where a formal TTP arrangement is needed, our specialists are available to assist you in putting such measures in place. If we assist you with the process your TTP application is more likely to be successful, and allows you to focus on running your business. The following practical advice will help the process:

• The timing of the request to HMRC should ideally be once a tax liability has been established but before it falls due for payment. Given the significant increase in requests, HMRC are likely to give priority where payments are due within a week or two.
• Before contacting HMRC you should ensure you have your 10-digit Unique Taxpayer Reference number, your bank account details and basic financial information including your income, expenditure and assets.
• At this stage the default response from HMRC to cash flow problems arising from coronavirus appears to be to allow two months deferral of tax payments due, however, HMRC debt management contact centre staff typically have the authority to agree a time to pay period of up to 12 months.
• HMRC would prefer an upfront payment, as part of a TTP arrangement, but seemingly understand if this is not possible or desired by the taxpayer.
• If a two-month deferral is granted, HMRC will contact the business after one month to ask either for full payment in one months’ time or a payment plan which commences one month later. Further deferral may be possible depending on specific circumstances.
• If the business has a direct debit arrangement for tax payments with HMRC, it should be cancelled (after the deferral is agreed) as HMRC are unable to refund payments received.

Further information can be found here and the HMRC COVID-19 Helpline number is 0800 015 9559.

As well as deferring tax there are several steps a business can take to improve its cashflow position from a tax perspective.

For further information and guidance, please get in touch.

How can we help?

Our team is well resourced and experienced in advising companies and not-for profit organisations, allowing you to focus on managing your business during this trying period. We are set up to work from home so you can expect the same level of service, albeit remotely rather than in-person. We have:

• A team of debt advisory and corporate finance experts used to working with banks and other lenders, and can support you with CBILS and CCFF scheme applications. We understand how lenders are currently making credit decisions, and for CBILS loans above £250k particularly can help with your application.
• Our restructuring and insolvency experts can advise businesses under stress about the options available to them.
• Our tax experts will also be on hand to advise you on applications to HMRC for the Time to Pay initiative, for corporate tax advice and R&D tax claims. We also have VAT & Duty experts who can support you in revising your VAT position.

Do call us on 0330 124 1399, via our enquiry form or speak to your usual Kreston Reeves contact.