If you can’t meet your tax bills you can sometimes negotiate with HMRC for more time to pay.
You can get a time to pay (TTP) arrangement with HMRC for any tax. If you’re in business, you can apply not just for a self-assessment bill, but payroll
taxes, VAT and corporation tax. However, unlike commercial creditors HMRC won’t ever reduce the amount of debt but it will tailor a TTP arrangement
to your financial circumstances.
You may not get a TTP arrangement if HMRC doubts you’ll keep up with the payment schedule. HMRC will want from you about your finances.
Payment periods are as short as possible, usually twelve months or less. But for individuals there’s no longer a maximum. Contact HMRC as soon as you think
you won’t be able to pay a tax bill. If it’s before the payment deadline, ring the Payment Support Service. If the payment date has passed, ring the
self-assessment payment helpline if it’s a personal tax bill.
By agreeing a TTP arrangement before the tax bill is due you’ll avoid late payment penalties that HMRC would otherwise charge.
HMRC have a new system for applying online. The service can only be used for self-assessment tax bills, where you owe £10,000 or less, have no other tax
debts and no other TTP arrangements.
HMRC puts non-payers into one of two categories - “can’t pay” or “won’t pay”. It will put you in the “won’t pay” category if it thinks you have the financial
means to pay but are playing for time. If so, it won’t agree a TTP arrangement and will fast track enforcement proceedings.
HMRC expects you to explore other means of raising cash to pay your tax bill before agreeing to a TTP arrangement. This might mean selling investments
or borrowing elsewhere.
If you’re in business, this can be a difficult equation. You might have funds on hand but need them to meet costs like wages in order to keep trading.
HMRC should take this into account and classify you as “can’t pay”.