Having trouble paying the tax bill? How ‘Time to Pay’ Could Help You

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If you are having trouble paying HMRC what you owe, then a “time to pay” agreement may be the answer to your worries about your tax bill.

Record numbers use an aid system put in place by HM Revenue & Customs to help taxpayers who are struggling to pay what they owe.

A new analysis from law firm Pinsent Masons has revealed that there are now a whopping 864,400 taxpayers using “time to pay” agreements.

Not only is this a new record, but it represents a staggering increase in the number of taxpayers spreading their payments this way just a year ago, when there were 647,770 arrangements in place.

That’s a whopping 38% jump in just one year.

Obviously, a huge factor in this big leap is the pandemic.

A significant number of businesses have closed their doors due to the various lockdowns and measures related to Covid, and as a result, many taxpayers have had a much harder time paying their taxes, possibly because they have been put in. leave or even lost. entirely their work.

The growth in arrangements is even more striking when compared to 2010, after the last financial crisis, when there were just under 140,000 taxpayers on such arrangements.

Having trouble paying your bill? Here’s what HMRC has to say

How does a “time to pay” agreement work?

Payment term agreements allow taxpayers to share the cost of money they owe HMRC.

Each arrangement is based on a taxpayer’s personal situation, so there is no such thing as a “standard” deal.

Instead, the IRS examines what you owe, what you earn, and how long you are likely to need to pay off that balance.

It will also look at the assets you own, to see if they can be used to pay off your debt. That doesn’t mean to push you to sell your family home or try to access your pension sooner, however.

There is no upper limit on how much time HMRC can give you to pay off your debt, while also emphasizing that it generally expects you to pay no more than 50% of your disposable income for the loan. debt, although it can be higher if you have very high levels of disposable income.

The agreement is flexible, rather than a fixed contract. Therefore, if your income increases or if you receive a windfall, then this can be shortened, but also, it can be extended if necessary.

Be warned though, there is a cost to consider here as interest will be charged, so it will cost you more overall than if you could just wipe out those tax debts in one payment.

Proponents of the delay in payment system argue that it is beneficial to both the taxman and taxpayers in general, as it ensures that HMRC receives a greater portion of the tax due – more interest than if the taxpayer ended up having to go through the insolvency deal.

Taxpayers obviously benefit as well, as they have a bit of a break to pay off their tax debts and can pay back the money they owe in affordable chunks.

Need help with your tax return? Simply Tax can help you (commercial link)

Establishment of a “payment deadline” agreement

So if you are having difficulty with your tax obligations, how do you go about setting up a payment deadline?

The first step will be to contact HMRC itself to explain your situation. When calling with the tax authorities, you will need the following:

  • The reference number relating to the bill you wish to discuss;
  • Details of the amount of tax you cannot pay, covering all overdue debts owed to HMRC;
  • Why you are unable to pay and what is your current financial situation;
  • What you did to try to pay your bill on time and in full;
  • How do you expect your finances to change in the future;
  • Your bank details, so that you can set up a direct debit for your arrangement.

Depending on your situation and what you owe, HMRC will then set a payment deadline if they feel this is the best way to go.

If you cancel your payments or simply don’t make them, the tax authorities may seek to renegotiate the arrangement. However, he may take other action, such as having an HMRC field force officer visiting you at your home, or initiating proceedings in county court or insolvency proceedings.

Sam Wardleworth, a partner at Pinsent Masons, noted that while the HMRC has been more flexible than is generally the case with rescheduling tax debts during the pandemic, it would be a mistake to assume that will remain the case at the to come up.

He added: “For most taxpayers, difficulties in agreeing on a payment deadline usually arise when they fail to contact HMRC quickly enough or the tax debt is of a higher value. Under these circumstances, taxpayers may find themselves subject to a more rigorous application process that requires more thoughtful navigation. “

Need help with your tax return? Simply Tax can help you (commercial link)

Configure it yourself

If you are self-employed, you may be able to set up your own “payment deadline” agreement online, without having to officially contact the tax authorities.

There are still a few criteria that you must meet. The debt will need to be £ 30,000 or less, you will not need to have any other payment plans or debts with HMRC and your tax returns will need to be up to date. It will also require that less than 60 days have elapsed since the payment deadline.

As long as you meet these requirements, you can probably set up an arrangement to pay your tax bill in stages.


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