No matter where you are in the UK, as a business owner or individual, you may be struggling to pay PAYE or VAT to HMRC. Our accountants talk to businesses and individuals in St Albans, Watford, and Welwyn Garden City, and it is clear that the tax burden is affecting businesses. HMRC has a number of services that can help, and our accountants can guide you through these services. However, speaking to a local accountant can be extremely beneficial for planning for future years. HMRC services can help in the short term, but planning for the long term is even more vital.
Time to Pay Service
Find out more about HMRC’s Time to Pay service below, or speak to your local accountant at Visionary if you are concerned about your business’s tax debt.
In difficult financial times it is worth knowing about HMRC’s online service for Time to Pay arrangements. Yes, these can still be done via the telephone, however, HMRC stress, quite correctly bearing in mind their call wait times, that facilitating this to be done online is quicker. It is not about changes to the purpose and eligibility for entering a Time to Pay arrangement.
Time to Pay is, simply, an arrangement with HMRC to pay a tax liability in instalments. So, HMRC still gets the money that they are due, however, the taxpayer enters into a repayment plan, spreading the cost.
You will not be able to set up a payment plan if HMRC does not think you will keep up with the repayments. If HMRC cannot agree a payment plan with you, they’ll ask you to pay the amount you owe in full.
To set up a payment plan you’ll need:
- the relevant reference number for the tax you cannot pay, such as your unique tax reference number
- your UK bank account details - you must be authorised to set up a Direct Debit
- details of any previous payments you’ve missed
It is worthwhile going through the eligibility criteria:
PAYE (Self-Assessment)
HMRC will ask questions about income and spending when setting-up a plan with the criteria:
- The latest Self-Assessment tax return must have been filed
- The total debt must be £30,000 or less
- The Time to Pay application is within 60 days of the payment deadline, and
- There are no other payment plans or debts with HMRC
PAYE (Employer)
The following criteria apply:
- PAYE submissions (via RTI) must have been sent and / or any Construction Industry Scheme (CIS) returns
- You have missed the deadline to pay an employer PAYE liability
- The total debt is £50,000 or less
- The plan is to repay the debt within 12 months
- The debts are 5 years old or less
- There are no other payment plans or debts with HMRC
VAT
The following criteria apply:
- All VAT returns have been filed
- You have missed the deadline to pay an VAT liability
- The total debt is £50,000 or less
- The debt must be for an accounting period that started in 2023, or later
- The plan is to repay the debt within 12 months
- There are no other payment plans or debts with HMRC
If you cannot set up a payment plan online
You’ll need to contact HMRC.
They will ask you:
- if you can pay in full
- how much you can repay each month
- if there are other taxes you need to pay
- how much money you earn
- how much you usually spend each month
- what savings or investments you have
If you have savings or assets, HMRC will expect you to use these to reduce your debt as much as possible.
If you’ve received independent debt advice, for example from Citizens Advice, you may have a ‘Standard Financial Statement’. HMRC will accept this as evidence of what you earn and spend each month.
If your company is in tax debt
HMRC will ask you to propose how you’ll pay your tax bill as quickly as you can. They will ask questions about your proposal to make sure it is realistic and affordable for you.
You must reduce your debt as much as possible before setting up a payment plan. You can do this by releasing assets like stock, vehicles and shares.
HMRC may ask company directors to:
- put personal funds into the business
- accept lending
- extend credit
How much you'll pay
The amount you’ll be asked to pay each month will be based on how much you have left after you pay any rent, food or utility bills and fixed outgoings you have, like subscriptions.
You’ll usually be asked to pay around half of what you have left over each month towards the tax you owe.
You can also agree to pay more if you want. Paying your debt quicker means you’ll pay less in total because you’ll pay less interest.
If you get a pension, HMRC will count that as income, but will not count the amount in your pension pot as savings.
How long your payment plan lasts
There’s no time limit on how long a payment plan can last. It will depend on how much you owe and what you can afford to pay each month.
You should contact HMRC if anything changes that could affect your payment plan. You can make the payment plan longer or shorter.
If HMRC finds out that your circumstances have changed, they may contact you to discuss changing your repayments.
If you miss a payment
HMRC will contact you to find out why. Where possible, they’ll try to rearrange or renegotiate the payment plan with you.
If you cannot pay another tax bill, contact HMRC. You may be able to include the new tax bill in your Time to Pay arrangement.
Avoid stress and potential legal action
Don’t get yourself into debt if you are eligible to enter a Time to Pay arrangement. It is easiest and quickest to do this online, though it can still be done by post or telephone.
Using HMRC’s digital services, if possible, does reduce the calls to the helpline enabling staff to handle other queries. Although, note that a client cannot set-up a VAT payment plan online if they are in the Cash Accounting Scheme, Annual Accounting Scheme or making payments on account.
All the below links require a Government Gateway login and password and direct you to the place where you can find the Time to Pay option (so some of the links are generic ones).
Set-up a Self-Assessment payment plan online (Gov.UK)
Set-up an employers’ PAYE payment plan online (Gov.UK)
Set-up a VAT payment plan online (Gov.UK)
Payment Problems – telephone numbers (Gov.UK)
Local PAYE & VAT debt advice in St Albans
Our local St Albans based accountants can help plan for the future and provide advice tailored to your specific financial situation. Whether you need assistance with PAYE, VAT, or other tax-related concerns, we are here to support you. Contact us today to schedule a consultation and take the first step towards managing your tax debt effectively.