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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: PAYE: penalties for late payment: Time to Pay (TTP)

Legislation allows HMRC to suspend penalties for amounts included in agreed TTP agreements for the duration of the arrangement, providing:

  • the amounts included in the TTP were not already liable to penalties
  • the employer makes payments on or before the dates agreed.

Penalties may be charged on amounts already overdue up to the date of the time to pay arrangement. They will not be charged from the date the employer requested a time to pay arrangement as long as they keep to the agreed terms.

Example: TTP agreed for a debt that was already 4 months late and TTP will continue for next 9 months. Late payment penalties can be charged on the debt for the first 4 month period, but 6 or 12 month penalties will not apply because the employer agreed the TTP arrangement before these penalties became due.

If the employer fails to keep to the arrangement and the TTP is cancelled, penalties can be charged as if the arrangement did not exist. If the TTP arrangement has not been cancelled you must not cancel retrospectively instead you will have to treat the TTP arrangement as it if was adhered to.