If your company is behind on tax, HMRC pressure can feel relentless. Letters and calls quickly escalate, and before long you could be facing threats of enforcement or even a winding-up petition. In these situations, one of the first options many directors hear about is a Time to Pay arrangement (often shortened to TTP).
In a Time to Pay arrangement HMRC lets you spread overdue tax over monthly instalments, giving your business breathing room. And in the right circumstances, a TTP can be exactly what’s needed.
But there are also limits. Many directors find that while the arrangement keeps HMRC at bay, it doesn’t take into account all the other debts and outgoings, leaving very little room to recover.
What is a Time to Pay arrangement?
A Time to Pay arrangement is a structured repayment plan agreed with HMRC. Instead of demanding the full balance of overdue VAT, PAYE, Corporation Tax or other liabilities upfront, HMRC allows you to pay in instalments over a set period — usually 6 to 12 months.
The goal is to stop your tax arrears from spiralling further while keeping your business trading. A TTP is not automatic. HMRC will only agree if they believe your company can realistically meet the repayments without falling behind again.
When will HMRC consider a Time to Pay arrangement?
HMRC looks at several factors before granting extra time. They want to see evidence that:
- Your business is viable and has a realistic chance of survival
- You can afford the proposed instalments from future cash flow
- You’ve been compliant in the past (e.g. submitting returns on time)
- You’ve acted quickly, rather than waiting for enforcement to start
In practice, this means you’ll need to prepare up-to-date accounts, cash-flow forecasts and a clear repayment proposal. HMRC wants reassurance that you’re not simply delaying the inevitable.
The benefits of a TTP
When affordable, a TTP can provide genuine relief. It can:
- Stop immediate enforcement action, such as bailiffs or winding-up petitions
- Allow you to spread payments into manageable instalments
- Give breathing space to stabilise cash flow and trade through difficulties
- Demonstrate to HMRC that you’re engaging proactively and responsibly
For companies with short-term tax arrears and a clear path to recovery, it can be an effective tool.
The risks and limitations Of A TTP
A Time to Pay arrangement can give short-term relief, but it’s not always the best solution. There are some key points to be aware of.
They’ll do a cash-flow check: HMRC will want to see forecasts before agreeing, to make sure you can keep up with the repayments.
It’s for tax only: The arrangement covers HMRC debts but not suppliers, landlords, banks or lenders, so wider pressures remain.
The terms are short: Most TTPs last up to 12 months, which may not be enough if cash flow is already tight.
There are strict rules: Missing an instalment can cause HMRC to cancel the deal and restart enforcement.
What if your TTP fails?
If you fall behind on a TTP, HMRC is likely to take swift action. That could mean issuing a statutory demand, seizing assets or petitioning for Compulsory Liquidation. At this point, directors often feel they’ve run out of options. But other options could still be available.
Alternatives to a Time to Pay arrangement
If your company’s debts extend beyond HMRC, or if repayments feel unmanageable, more formal insolvency solutions may provide a better route. These include:
Company Voluntary Arrangement (CVA): A Company Voluntary Arrangement is a legally binding deal with all unsecured creditors, not just HMRC. Repayments are based on what the company can realistically afford over several years.
Creditors’ Voluntary Liquidation (CVL): If recovery isn’t viable, a Creditors’ Voluntary Liquidation allows you to close the company in an orderly way. HMRC and other debts are written off, and directors can often move on without personal liability (unless misconduct is found).
The availability of each of these options depends on your business’ viability, assets and future prospects.
Should you try a TTP?
If your company is fundamentally sound but just struggling with short-term arrears, a Time to Pay arrangement can be a lifeline. But if the problem is wider, with multiple creditors, shrinking margins or no realistic way to catch up, it may only delay the inevitable and make things harder down the line.
The key is not to ignore the issue. HMRC is usually more open to TTP discussions if you act before enforcement begins. And if a Time to Pay arrangement isn’t realistic, seeking insolvency advice early gives you more options than waiting until HMRC takes matters into its own hands.
How we can help with a Time to Pay arrangement
We regularly help directors negotiate Time to Pay arrangements with HMRC. But we’re also honest when a TTP isn’t the best fit. We’ll look at your full financial picture, not just the tax arrears, and explain every option — from informal arrangements to formal insolvency solutions.
If you’re under pressure from HMRC, don’t wait until it’s too late. Get in touch today for free, confidential advice. We’ll help you assess whether a TTP is realistic or whether another route would protect you better.
