A common request we receive from those that are struggling to meet the ongoing tax liability is “can we arrange time to pay?”.

In order to allow a company or individual time to pay, HMRC generally follow the thought process below:

1. A company must be able to pay the full amount of arrears within 12-18 months, or an individual 12-24 months.
2. All other tax liabilities must be paid on time throughout the arrangement.
3. If one payment is missed, but remedied quickly, the arrangement can continue.
4. Only in exceptional circumstances do they allow a second time to pay arrangement in quick succession without full financial information to prove the company is solvent and can meet the requirements in point 2, above.

They follow a very aggressive but common-sense approach. The Officers in the debt recovery teams are only there to collect debt. Their only job is to get the funds in as quickly as possible and they, therefore, will make repeated threats of insolvency action from an early stage.

With some thought, it is possible to cause delays to the HMRC process to allow further time to pay.

If the debt is regarding VAT, do not be pressurised to pay the arrears at the expense of ongoing labilities. It won’t help you because the Surcharge Penalties could be 15% of the VAT not paid. It is better to meet the ongoing VAT liability and you should read our article on taxpayers right to allocate vat payments to current periods even when in arrears.