HMRC Time to Pay Rejections

What can I do if my TTP is rejected by HMRC?

The Time to Pay scheme, or TTP, helps businesses that are experiencing temporary financial difficulty to repay their tax arrears over a period of time, potentially up to 12 months. TTPs are intended for businesses that are viable for the long-term, and that therefore have a reasonable chance of being able to adhere to the agreed repayments.

Online applications can be made under certain conditions, making the process faster and more straightforward. So why might applications be rejected, and what happens if your business is unable to keep up with repayments?

Why might a Time to Pay arrangement be rejected by HMRC?

There are various reasons why a TTP might be rejected, including:

Failing to meet the eligibility criteria

In order to be eligible for an online TTP you must:

• Have filed your 2019/20 self assessment tax return
• Be up-to-date with filing earlier tax returns
• Owe a tax debt of between £32 and £30,000
• Be able to repay the outstanding sum within 12 months
• Have no other Time to Pay arrangements in place
• Make monthly payments by direct debit

Incorrect information on the application form

Your business may have deferred tax payments from 2020, and a TTP rejection could be triggered if the liabilities you have included on the form are incorrect. The tax liabilities that were due at the end of January 2021 include:

• Balancing income tax for 2019/20
• Second payment-on-account for 2019/20 if it was deferred in 2020
• First payment-on-account for 2020/21 – this will be roughly half of your total liability in 2019/20
• Capital Gains Tax (CGT) for 2019/20
• Class 2 and Class 4 National Insurance Contributions (NICs) for 2019/20

HMRC may issue a Time to Pay rejection for other reasons, however, and it is important to be proactive in contacting them directly if an online application has failed. For tax arrears over £30,000 you will need to apply by telephone anyway, so what happens if they reject your application?

What happens if a TTP is rejected?

HMRC will expect you to provide strong supporting evidence that the payments you are proposing are affordable, but they might take the view that the sums are unsustainable given your business’ financial situation.

Alternatively, they could demand a higher monthly repayment than the amount you are offering, which could also lead to rejection if your business finances cannot support this over the full term.

If a TTP is rejected and HMRC believes your business 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.

So what should you do if your application is not successful, or your business cannot keep up with the repayments for an existing Time to Pay arrangement?

Help if your TTP is rejected or fails

If your company’s Time to Pay application is rejected by HMRC, or you cannot afford to continue with the repayments on a current arrangement, there are options that can provide financial relief.

Company Voluntary Arrangement (CVA)

A Company Voluntary Arrangement involves formally restructuring your debts so that an affordable monthly repayment allows trade to continue. The premise of this arrangement is to enable viable businesses to trade their way out of difficulty, with a licensed insolvency practitioner assessing suitability.

Emergency funding

Alternative funding can offer long-term sustainability to businesses struggling with cash flow, whether via regular cash injections throughout each month, or a larger cash lump sum.

Seeking professional support is crucial

Our expert team at Begbies Traynor Group can communicate with HMRC on your behalf where necessary, and help you prepare a Time to Pay application based on your business’ specific circumstances.

We will clearly present all your options if HMRC has already rejected a Time to Pay application, or an existing one has failed, offering reliable independent advice. Please get in touch to arrange a free, same-day consultation – we work from a broad network of offices around the UK.