COVID-19: Deferring your tax payments with HMRC’s Time to Pay scheme
In the March Budget, the Chancellor announced that any business which is in financial distress as a result of coronavirus (COVID-19) can seek assistance with payment of its tax liabilities by using the Time To Pay scheme (TTP).
We have had a number of queries from clients and contacts about TTP since then, so have prepared the following Q&A to help you understand the operation of the scheme and to better understand whether it can apply to your business.
What is TTP?TTP is operated by HMRC, through a helpline, with the aim of agreeing arrangements on delaying the payment of tax liabilities. It has been in existence for a number of years, although it has been expanded recently to specifically cover the difficulties caused by coronavirus. The agreements under TTP are reached on a case by case basis and are tailored to individual circumstances and liabilities.
What businesses are covered?All businesses across all sectors of the economy are covered, whether operating as companies or self employed. TTP does not just apply to retail and leisure businesses.
What taxes are covered?Most taxes are covered – including PAYE & National Insurance, VAT, Corporation tax and income tax.
Does my business need to be in actual arrears before I can use the service?No. In fact, it is preferable that you contact the helpline before you get into arrears.
What assistance can I expect from the service?A TTP arrangement will typically allow you to spread your tax payments over a longer period of time than would otherwise be available and can help with late payment penalties. It will also mean you should avoid legal proceedings for recovery of unpaid taxes.
Who should contact the helpline?The service is offered to businesses rather than their advisers, so a senior person within the organisation should make the initial call.
What should I do before making the call?You should be prepared with the following information:
- your reference number (for example, your 10-digit Unique Taxpayer Reference or VAT reference number)
- the amount of the tax bill you are finding it difficult to pay
- how much you can pay and how long you may need to pay.
How much tax can I defer?It is important that you make a realistic assessment of what you can afford to pay over the period of the arrangement and be open with HMRC. It will want to assist viable businesses that are experiencing genuine financial difficulties due to the impact of coronavirus and will ensure it has agreed to a plan that will ultimately settle liabilities that will be due.
What number should I call?There is a dedicated helpline for those businesses facing financial distress caused by coronavirus: 0800 0159 559.