As the 31 January self-assessment deadline looms, many business owners find themselves navigating the choppy waters of tax obligations.
If you’re currently caught in a cashflow bind and worried about meeting your tax bill, it’s crucial to remember that you’re not without options.
One such lifeline is the Time to Pay (TTP) arrangement offered by HMRC. This post aims to demystify TTP arrangements and guide you on how they can be a viable solution in times of financial strain.
What is a TTP arrangement?
A TTP arrangement is essentially an agreement with HMRC that allows you to spread your tax payments over a period of time.
This can be particularly helpful if you’re experiencing temporary financial difficulties. HMRC understands that life can throw curveballs, impacting your ability to pay taxes on time. TTP arrangements are tailored to individual circumstances, offering a bespoke solution that acknowledges your specific financial situation.
Who is eligible?
Most businesses and individuals who are unable to pay their tax bill in full are eligible for a TTP arrangement.
The key here is communication — you must reach out to HMRC before your payment is due.
Proactivity is paramount. HMRC will consider your income, expenditure, assets, and what you can realistically afford to pay. It’s not a ‘one size fits all’; each case is assessed on its own merits.
How to apply
The first step is to contact HMRC. They have dedicated helplines, and it’s advisable to have your financial details at hand when you call.
This includes information about your income, expenditures, assets, and liabilities. Being transparent and providing accurate information will aid in a smoother process.
How to contact HMRC to discuss a TTP arrangement
For self-assessment bills, you may be able to set up a payment plan online. This will let you pay your tax bill in instalments without contacting HMRC.
You can set up a payment plan to spread the cost of your latest self-assessment bill online without calling HMRC if:
- you owe £30,000 or less
- you do not have any other payment plans or debts with HMRC
- your tax returns are up to date
- it’s less than 60 days after the payment deadline
The benefits of a TTP arrangement
The most significant benefit is the ability to break down your tax bill into more manageable monthly payments. This can ease the pressure on your cashflow, especially if you’re going through a rough patch.
By arranging a TTP, you’re actively taking steps to meet your tax obligations, which can help you avoid late payment penalties.
Peace of mind
Financial stress can be overwhelming. Knowing that you have an agreement in place can provide peace of mind and allow you to focus on getting your finances back on track.
What you need to know
While TTP arrangements are a helpful tool, they are not a ‘get out of jail free’ card. Interest on the unpaid tax will still accrue until the debt is fully paid. It’s also crucial to stick to the agreed terms of the arrangement.
Failure to do so can result in the full amount becoming due immediately.
How we can help
At Spark, we understand that dealing with tax issues can be daunting. If you’re considering a TTP arrangement, we can offer guidance and support throughout the process.
We can help you understand your financial position, assist in preparing the information HMRC will require, and even communicate with HMRC on your behalf.
The key takeaway here is not to bury your head in the sand. If you’re facing financial difficulties, a TTP arrangement could be a sensible approach to managing your tax liabilities.
Remember, HMRC is more approachable than you might think, and they’re often willing to work with you to find a solution. And remember, we’re here to help you navigate these waters, offering expert advice and support when you need it most.
As the deadline approaches, take a moment to assess your situation. If you think a TTP arrangement could be beneficial, don’t hesitate to reach out.
If you need help with your self-assessment tax return, contact Spark Accountants today.