HMRC Time to Pay: How to Negotiate a Tax Debt Payment Plan

HMRC Time to Pay is often the fastest and least disruptive way to deal with a tax debt that cannot be paid immediately. But HMRC does not grant TTP automatically and a poorly prepared request, or a default, can accelerate enforcement action rather than prevent it. This guide explains exactly what HMRC needs and how to negotiate an arrangement that holds.

What is Time to Pay?

Time to Pay (TTP) is HMRC’s administrative arrangement allowing a business or individual to pay an outstanding tax debt by instalments rather than in a single sum. It is not a statutory scheme with its own legislation, HMRC’s general debt management powers, including the provisions of section 108 of the Finance Act 2009, underpin its operation, but TTP is a well-established practice documented in HMRC’s internal Debt Management and Banking Manual (DMBM800000 onwards).

TTP is available for all taxes administered by HMRC, including:

• Self Assessment income tax and Class 4 NIC
• Corporation tax
• VAT
• PAYE income tax and employee NIC
• Employer NIC
• Construction Industry Scheme (CIS) deductions
• Stamp Duty Land Tax (less common)

During a TTP arrangement, HMRC will not typically take enforcement action against the company for the debts covered by the arrangement. However, enforcement remains available immediately if the arrangement is defaulted on.

How to apply for HMRC Time to Pay

For businesses: Business Payment Support Service

The primary route for business TTP applications is HMRC’s Business Payment Support Service (BPSS), reachable on 0300 200 3825. The BPSS handles TTP requests for VAT, PAYE, NIC, CIS and corporation tax.

When you call, HMRC will ask for:

• The company’s UTR and VAT registration number (if applicable)
• A breakdown of all HMRC debts
• A brief explanation of why the debt cannot be paid immediately
• Your proposed payment schedule
• Confirmation that all outstanding returns have been filed

For smaller, straightforward debts with a first-time applicant and a short proposed repayment period, HMRC may agree a TTP on the spot. For larger debts or more complex situations, HMRC will typically ask for supporting financial information to be submitted before confirming the arrangement.

Online self-serve TTP

HMRC offers an online self-serve TTP option through the Government Gateway for Self Assessment debts up to a set threshold (currently £30,000, though subject to change) where the return has been filed. This is the quickest route for personal taxpayers with manageable self-assessment arrears. Business taxes generally require a telephone application.

TTP when a petition has been presented

If HMRC has already presented a winding-up petition, the BPSS is no longer the right contact. Negotiations must be conducted with HMRC’s solicitors (typically the Government Legal Department or, in England and Wales, HMRC’s in-house litigation team). A specialist adviser who knows the insolvency process is essential at this stage. Read our winding-up petition guide for details of how TTP interacts with live petition proceedings.

What HMRC asks for

HMRC’s debt management officers are not simply processing requests, they are assessing the credibility of the company’s financial position and the viability of the proposed arrangement. The following documents and information are typically required for any TTP above a modest threshold:

1. Business cash flow forecast

A month-by-month cash flow projection for the period of the proposed TTP, showing:

• Expected turnover and cash receipts
• Ongoing tax obligations falling due (VAT, PAYE, NIC, CT instalments)
• Operating costs (wages, rent, suppliers)
• The TTP instalments
• Opening and closing cash balances

HMRC will check that the company can genuinely afford both the TTP instalments and its future tax liabilities at the same time. A forecast that shows the company continuing to accrue further HMRC debt will be rejected.

2. Statement of assets and liabilities

HMRC may ask for a balance sheet or schedule of assets, particularly for larger debts, to understand whether the company could raise funds from other sources (for example, by selling non-core assets or taking a director loan).

3. Explanation of why the arrears arose

A clear, factual narrative. HMRC distinguishes between:

• Temporary difficulty: A specific identifiable event caused a cash flow problem (late customer payment, loss of a contract, unexpected cost) from which the business is now recovering. This supports a TTP application.
• Structural difficulty: The business is simply unprofitable and cannot service both its tax and its operating costs. TTP is unlikely to be appropriate here, insolvency advice may be required instead.

4. Proposed payment schedule

A specific schedule showing when each instalment will be paid. HMRC prefers regular equal monthly payments. The schedule should not front-load or back-load payments in ways that look unrealistic.

What makes TTP more likely to be approved

HMRC’s internal guidance identifies several factors that support approval:

• First-time request: A company that has never previously needed a TTP is more credible than one with a history of arrangements and defaults
• Genuine temporary difficulty: The cash flow problem has an identifiable cause that has been (or is being) resolved
• Realistic proposal: HMRC has seen thousands of cash flow forecasts; officers quickly spot optimistic assumptions. A conservative, credible forecast is more persuasive than a bullish one that collapses under scrutiny
• Current compliance: All returns up to date; no pattern of late filing; no existing HMRC penalties in dispute
• Short repayment period: HMRC is more receptive to arrangements of 6–12 months than to requests for multi-year repayment. For longer periods, a CVA may be more appropriate
• Good faith: HMRC officers respond to straightforward, transparent applicants. Incomplete information or evasive answers make approval less likely

Interest during TTP

Interest continues to run on unpaid tax throughout the TTP period at HMRC’s statutory late payment rate. There is no interest holiday, interest reduction or incentive rate for TTP. HMRC’s interest rate is linked to the Bank of England base rate and has been materially higher since 2022 than it was in the preceding decade.

The practical implication is that a longer TTP arrangement costs more in interest than a shorter one. Where funds can be found to shorten the arrangement, this is usually the right financial decision. Specialist advisers can sometimes negotiate a lump-sum payment arrangement where a director or connected party can inject capital, reducing the overall interest cost.

Default and HMRC’s response

If a TTP arrangement is defaulted on, either by missing an instalment or by failing to pay an in-period tax liability as it falls due, HMRC can:

• Cancel the TTP arrangement and demand immediate payment of the full outstanding balance
• Take enforcement action immediately, without serving a further statutory demand
• Refuse to agree a new TTP arrangement in the future (or agree one only on more restrictive terms)

In practice, a single missed instalment does not always result in immediate cancellation if the company contacts HMRC promptly, explains the reason and proposes how to get back on track. However, a pattern of missed payments or missing an in-period tax payment while the TTP is in place, is treated as a fundamental breach.

HMRC’s enforcement powers on TTP default

If TTP fails and immediate payment is demanded, HMRC has a range of enforcement tools available, broadly escalating in severity:

1. Taking control of goods (formerly distraint)

Under the Taking Control of Goods Regulations 2013 and the Tribunals, Courts and Enforcement Act 2007 (TCGA 2007), HMRC can instruct an enforcement agent (formerly a bailiff) to seize and sell the company’s assets to recover the tax debt. This can include business equipment, vehicles, stock and other tangible assets. An enforcement agent can attend the company’s premises without notice once a Warrant of Control has been issued.

2. County court judgment (CCJ) and charging order

HMRC can obtain a county court judgment for the debt and then apply for a charging order over any property owned by the company. A charging order means the debt is secured against the property and must be paid before the property can be sold.

3. Winding-up petition

For companies, the most powerful enforcement tool is a winding-up petition under section 122(1)(f) of the Insolvency Act 1986. HMRC does not need to start the process afresh after a TTP default, it can present a petition immediately. See our winding-up petition guide for how to respond.

4. Bankruptcy petition (individuals)

For individual taxpayers and sole traders, HMRC can present a bankruptcy petition for unpaid personal tax (Self Assessment income tax, CGT, IHT).

TTP during a compliance check or open enquiry

An important and often-overlooked issue: if HMRC has an open compliance check or enquiry at the same time as you are negotiating a TTP, these are handled by completely separate HMRC teams. The TTP team (Debt Management) does not have visibility of the compliance team’s findings and vice versa.

This creates practical risks:

• A TTP may be agreed on the basis of the debt known to Debt Management, while the compliance team is about to raise a substantial assessment that will massively increase the total debt
• Statements made to Debt Management as part of a TTP application (for example, about the company’s financial position) can, in principle, be used by the compliance team if they are relevant to the enquiry
• A TTP arrangement will not prevent the compliance team from raising assessments or issuing discovery assessments

Where a compliance check is open, any TTP application should be coordinated with advice from a specialist who understands both processes. Tax Dispute Consultants deals with exactly this kind of overlap regularly.

Renewing or extending TTP

If a TTP arrangement is running and the company needs more time, it is possible to request a variation or extension. HMRC will need to see updated financial information, a new cash flow forecast and an explanation of why the original arrangement cannot be completed as agreed. An extension is not automatic and HMRC is likely to scrutinise the request more carefully than the original application.

A company that has faithfully met all instalments to date and can demonstrate a specific, short-term reason for needing an extension is in a much better position than one that has missed instalments and is coming back asking for more time.

When TTP is not enough and insolvency is the better option

TTP is not a universal solution. There are situations where TTP is inappropriate and where addressing the underlying problem through a formal insolvency process is the more responsible course:

• The business is structurally loss-making and no realistic cash flow can support both ongoing tax and TTP instalments
• The total HMRC debt is so large that even a 12-month TTP would require monthly payments the company genuinely cannot afford
• There are multiple creditor problems, not just HMRC, in which case a CVA or administration may be more appropriate
• The director needs protection from personal liability proceedings (PLN, disqualification) that TTP alone cannot address

Pursuing a TTP in circumstances where insolvency is the right answer delays the inevitable and, in the meantime, the company continues to accrue tax liabilities it cannot pay. This makes the eventual insolvency worse and increases the director’s exposure to disqualification and compensation order risk. Our company insolvency guide explains the insolvency options in detail.

Frequently asked questions

Related guides

• HMRC and company insolvency: the complete guide
• HMRC winding-up petition: how to stop it
• Director disqualification and HMRC
• CVA and HMRC: negotiating a Company Voluntary Arrangement
• Director personal liability for company tax debts
• All tax dispute resources
• HMRC penalty calculator