How does coronavirus impact HMRC's Time To Pay scheme?

If your business is struggling with Corporation Tax, VAT and/or PAYE payments then you could be granted additional time by the government to pay what you owe.

15 April 2020

HMRC Time To Pay

What is it?

Small and medium-sized businesses who can’t afford to pay their tax bills can ask HMRC for a “time to pay” agreement to suspend debt collection. All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs. During the pandemic, the usual 3.5% annual interest on deferred payments will be scrapped.

Typically, successful applications will be granted 6-12 months extra to pay what is owed, however during the coronavirus crisis longer time periods could be offered. According to HMRC, there is no upper time limit with this scheme.

What evidence will I need to supply?

In order to make your claim as strong as possible, you'll need to put forward a reasonable repayment proposal with supporting evidence.

Strong claims typically include:

  • Forecasting sales
  • Evidence of efforts to cut costs
  • Proof that you are determined to settle your outstanding taxes

Although strong claims typically include this information, each application will be assessed on a case-by-case basis due to the significant disruption that coronavirus has caused.

What will help my application?

HMRC will consider a number of factors when deciding whether to grant you a Time To Pay agreement. These include:

  • Whether you've complied with tax rules and regulations in the past
  • Your business industry
  • Whether you've had (and kept to) previous Time To Pay arrangements
  • If your business has been affected by coronavirus (this will be assessed on a case-by-case basis)

How do I apply?

To start a Time To Pay case review, call HMRC on 0300 200 3835.

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Dan is part of the content team at iwoca. He writes articles explaining financial topics, as well as guides on the best support for small businesses during coronavirus.

Article updated on: 8 October 2020

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