What is a HMRC Time To Pay (TTP) arrangement?

A Time to Pay arrangement is a way of repaying your company tax arrears over a longer period of time to make doing so more affordable.

In order to enter into a Time to Pay arrangement, an agreement must first be reached between the indebted company and HMRC where it will be set out how much the company is committing to pay and over what period of time. You cannot typically have a Time to Pay arrangement longer than one year in duration.

Time To Pay is a common solution for UK businesses struggling to meet tax liabilities, however, not every company will be able to successfully negotiate this type of arrangement. With a Time to Pay arrangement, no debt will be written off, therefore you must be able to demonstrate your ability to repay the full amount of your tax arrears (and continuing tax liabilities) within a period typically not exceeding 12 months.

“HMRC tax arrears are one of the most common reasons directors contact us. In many cases, what starts as a missed VAT or PAYE payment quietly escalates until it feels overwhelming. The good news is that HMRC are generally willing to work with businesses that engage early and come to the table with a realistic plan.”
— Julie Palmer, Partner, BTG Begbies Traynor

 

 

 

Understanding more about Time to Pay (TTP) and HMRC

Time to Pay (TTP) arrangements are designed to help businesses that are fundamentally viable but experiencing temporary cash flow problems.

If HMRC believes that your company is at risk of becoming insolvent, they may act quickly to recover their money, so we must stress that a Time to Pay arrangement is only for those businesses which are fundamentally viable and are able to fully repay their tax arrears within a year.

How is HMRC approaching tax debt in 2026?

HMRC has taken a noticeably firmer stance on tax debt recovery in 2026. The resumption of Direct Recovery of Debt (DRD) powers from April 2026 means HMRC can now recover money directly from bank accounts in certain circumstances, without first obtaining a court order. They have also increased their use of external debt collection agencies.

For directors, this means the window between a missed payment and enforcement action is narrower than it has been in recent years. The post-pandemic flexibility that many businesses became accustomed to has largely ended.

“The shift we’ve seen in 2026 is significant. HMRC are acting faster and with less tolerance for delay than at any point since before the pandemic. Directors who wait for HMRC to contact them are already on the back foot.”
- Julie Palmer, Partner, BTG Begbies Traynor

Negotiating a Time to Pay arrangement with HMRC

When dealing with tax arrears, you are advised to be proactive with HMRC about the situation. Do not wait to be contacted by them because your tax payment was late, instead make them aware ahead of time that you are experiencing cash flow issues. You are much more likely to be able to negotiate a Time to Pay arrangement if you maintain good relations with HMRC and are able to demonstrate a good track record of meeting your tax obligations.

Time to Pay arrangements can be implemented for arrears of corporation tax, VAT and PAYE, but can also be used if you are anticipating problems with an upcoming payment or payments, and it may help you to avoid a late payment penalty. In our experience, the most common tax types involved in TTP negotiations are VAT and PAYE; corporation tax arrears are less frequent but tend to involve larger sums.

Before agreeing to a Time to Pay, HMRC will want to satisfy themselves that your company will be able to bring your tax affairs up to date in a timely manner and that the business is ultimately viable; as part of this they may consider the industry in which you operate along with your company's previous history of repayment as a whole.

If a Time To Pay arrangement is agreed, it is imperative that you meet these payments in full and on time, otherwise your problems could increase. HMRC could immediately cancel the arrangement if you default, calling in the total debt and applying a range of penalties.

Interest will typically be charged on the amount to be paid as part of the Time to Pay arrangement, but penalties may be lifted if you have made contact with HMRC quickly, and acted responsibly to redress your situation.

Interest is currently charged at 2.5% above the Bank of England base rate per annum (2026/27) on the outstanding balance. This is applied from the original due date of the tax, not from when the TTP is agreed, so the total amount you repay will be higher than the tax bill itself. It’s important to factor this into your repayment plan — many of the directors we speak to are surprised by how much the interest adds, particularly on larger arrears spread over the full 12 months.

Applying for a Time to Pay arrangement

Once you have put together a strong case in favour of being granted extra time to pay, you need to phone HMRC, or seek the help of a licensed insolvency practitioner who will negotiate on your behalf.

But what constitutes a ‘strong’ case? This means presenting a realistic proposal in terms of what you can afford to pay, backed up by evidence in the form of:

• Sales and cash flow forecasts for the following six months or more
• A plan of how you will cut costs to free up extra cash
• Generally conveying your determination to ensure repayments are met.

It is worth remembering that HMRC will want the Time To Pay arrangement to be over the shortest time possible, with the highest monthly repayments as possible, in order to recoup their money quickly. You must be careful, however, to offer only what you can afford, and be certain that your company can meet its obligations as set out in the plan before presenting this to HMRC.

Dealing with HMRC can be daunting unless you understand how they operate and what they are looking for in terms of a Time to Pay proposal; this is why many of our clients ask us to negotiate with HMRC on their behalf.

If you’re a self-assessment taxpayer and your bill is £30,000 or under, you may be able to set up a Time to Pay arrangement online through your HMRC account without needing to call. Nearly 18,000 payment plans were set up this way between April and December 2025. For larger amounts, or for corporation tax, VAT and PAYE arrears, you’ll need to contact HMRC directly by phone, or ask a licensed insolvency practitioner to negotiate on your behalf.

What we typically see

A hospitality business came to us with £45,000 in accumulated VAT arrears after a difficult trading period. The director had been avoiding HMRC’s letters, and by the time they contacted us, a statutory demand had already been issued.  We prepared a detailed cash flow forecast showing the business was viable, approached HMRC on the director’s behalf, and negotiated a 10-month repayment plan. The statutory demand was withdrawn and the company continued trading. Had the director contacted us, or HMRC directly, even a month earlier, the process would have been significantly simpler.

What happens if my Time To Pay is rejected by HMRC?

HMRC will expect you to provide strong supporting evidence that the payments you are proposing are large enough to satisfy HMRC, but small enough that they are affordable for your company. If HMRC take the view that the sums are unsustainable given your business’ financial situation they may refuse to grant any additional time to pay.

Alternatively, HMRC may demand a higher monthly repayment than the amount you are offering and if you are unable to do this, your Time to Pay application will be refused.

If a Time To Pay is rejected as HMRC believes your company is close to insolvency, they may decide to enforce the debt via enforcement action or even a winding up petition. A winding up order would result in the business being forcibly liquidated. 

Of the directors who come to us after a Time To Pay rejection, the most common reason is that they waited too long to approach HMRC, or proposed repayments that HMRC considered unrealistic. This demonstrates the importance of seeking professional advice as soon as you become aware your company will be unable to meet its tax obligations. Our licensed insolvency practitioners can help you find a way forward when HMRC debts become insurmountable.

If HMRC refuses a Time to Pay arrangement, or if an existing TTP fails because repayments can’t be maintained, there are still options available:

• Company Voluntary Arrangement (CVA) — A CVA allows you to propose a formal repayment plan to all unsecured creditors, including HMRC, typically over 3–5 years. Unlike a Time to Pay arrangement, a CVA can include all debts and may allow for a proportion to be written off. HMRC are one of the most common creditors we deal with in CVA proposals.
• Administration — If the business needs protection from creditors while a rescue plan is developed, administration provides a moratorium on enforcement action. This can buy time to restructure.
• Creditors’ Voluntary Liquidation (CVL) — If the business is no longer viable, a CVL provides an orderly way to close the company and deal with its debts. This is often a better outcome than waiting for HMRC to issue a winding-up petition, as it gives directors more control over the process.

Each situation is different, and the right option depends on whether the business is viable, the scale of the debt, and how quickly HMRC is pushing for resolution. This is exactly the kind of assessment we carry out in a free initial consultation.

Advantages and disadvantages of Time to Pay

Advantages

• Payments can be made over a longer period of time
• TTP provides a breathing space for viable companies that are experiencing temporary cash flow problems
• Formal insolvency procedures are averted
• Legal action is prevented
• If the TTP is put in place before a tax payment is due, surcharges and penalties will also be avoided
• Corporation tax, VAT and PAYE payments can be included in the agreement
• Cash flow management is made more efficient.

Disadvantages

• You must make sure that repayments are met in full and on time
• Operating in a high-risk industry can affect your company’s ability to obtain a TTP agreement
• Interest is payable on outstanding monies
• If the arrangement is cancelled, enforcement action may ensue.

The fact that late payers are spotted quickly by HMRC makes it all the more important to contact them as soon as you know there is a problem. Not only will this strengthen your case in favour of a Time to Pay arrangement, it will help the company’s financial position as late payment penalties will be avoided. 

How to give yourself the best chance of a Time to Pay approval

1.     Contact HMRC before they contact you. In our experience, directors who make first contact almost always get better outcomes than those who wait for HMRC to chase. If you know a payment is going to be late, call before the due date.

2.     Prepare your financial evidence. HMRC will want to see cash flow forecasts, a clear picture of your income and outgoings, and a realistic proposal showing how you’ll meet the repayments. Coming prepared signals that you’re serious about resolving the situation.

3.     Be realistic about what you can afford. Proposing repayments that are too high risks a default that could collapse the entire arrangement. Proposing too little risks rejection. Many of the directors we advise find this balance difficult to strike and it’s one of the main reasons they ask us to negotiate on their behalf.

4.     Keep all current tax obligations up to date. HMRC are far less likely to agree a Time to Pay if you’re falling behind on new liabilities at the same time. Demonstrate that the arrears are historical, not ongoing.

Dealing with HMRC can feel daunting, especially if the situation has been building for a while. But in most cases, there are more options available than you might think, particularly if you act early.  Call your nearest BTG Begbies Traynor office to arrange a free, confidential consultation. We negotiate with HMRC every day, and we’ll give you a clear, honest picture of where you stand and what’s possible.