HMRC internal manual

Debt Management and Banking Manual

DMBM800040 - Time To Pay (TTP): introduction: principles of Time To Pay

Time To Pay (TTP) arrangements allow HMRC to collect tax in a cost effective way. They allow viable customers who cannot pay on the due date to make payment(s) over a period that they can afford. Arrangements are tailored to the ability of the customer to pay and are typically for a few months although they can be longer. TTP arrangements exceeding 12 months are exceptional and must be authorised by a manager, with the exception of tax credit cases. Most arrangements involve regular monthly payments being made but in exceptional cases may involve a short period of deferral.

TTPs lasting over a year are only agreed in exceptional cases. Most arrangements involve regular monthly payments being made but in exceptional cases may involve a short period of deferral.

Principles of TTP

TTP arrangements fall within the scope of HMRC’s discretion provided the following principles are followed.

  • Objective criteria are applied in each case.
  • TTP arrangements are entered into on a case-by-case basis.
  • TTP is only agreed where HMRC is satisfied that the customer cannot pay their liability on the actual due date(s).
  • The customer offers the best payment proposals that they can realistically afford. If their ability to pay improves during the TTP period then they must contact us and increase their payments/clear the debt.
  • TTP is only agreed where HMRC believes that the customer will have the means to pay the taxes included in the TTP arrangement and any other taxes outside the arrangement which become due during the TTP period.
  • The TTP period is as short as possible.
  • The same principles are applied to all taxpayers, although the detail of processes can be tailored to reflect the risk/return associated with different liabilities. As a rule, the larger the liability the greater the risk and the greater the need for more information.

Other guidelines

Under no circumstances can HMRC ever reduce the amount of tax due as part of a TTP arrangement.

If repayments of tax become due during the TTP period HMRC must offset these against the debt. HMRC cannot on the one hand allow TTP whilst at the same time issuing a repayment of tax

We can only agree TTP based on the customers means to pay and can’t base it on other factors. For instance, we can’t allow TTP on the basis that a business could invest this money to produce greater payments of tax in the future.

For business taxes, the TTP duration should be less than 12 months. Exceptionally, periods in excess of 12 months can be considered.

Applicable interest will always be charged when payments are received after the due date, irrespective of whether TTP has been agreed or not.

HMRC is bound by TTP agreements that it enters into but is entitled to withdraw if:

  • new facts come to light that don’t support TTP
  • the customer has misled us or been untruthful
  • the customer defaults on the arrangement or does not satisfy the conditions of their TTP
  • any other reason comes to light where it becomes apparent that tax is at risk
  • a customer makes a claim for Universal Credit (in this case, any existing TTPs will be cancelled and all tax credits debt for each customer will be transferred to the DWP including any debt remaining from a cancelled TTP); the DWP will advise of the rate of recovery and any discussions on this will need to be had with them.

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Provisional TTP arrangements

We should avoid making provisional TTP arrangements which do not cover the full debt. An example of a provisional TTP would be where a customer has a debt of £5,000 and an arrangement has been agreed and set up for just three months at £100 per month with a review set at the end of the period.

Such arrangements very rarely lead to increased instalments and lead to extra work because we have to come back to them and, in effect, start again.

It is common for customers to make an initial proposal with the intention of increasing their payments in the future, perhaps because they expect some significant change in their financial circumstances. This should be built into the terms of the arrangement if the customer can be specific about the future increased payment. The IDMS Instalment Arrangement function now allows for this (see IDMSUG501425).

If the customer is unable to specify the future increased amount, and provided we consider the proposal to be acceptable, a TTP based on the initial payment amount (and for the whole of the debt) should be set up. The customer should be advised to contact us by a specific agreed date to renegotiate the arrangement (see DMBM803050). Direct debits should be set up wherever appropriate; this can always be amended if the arrangement terms are renegotiated.