What to do if you can’t pay your tax bill
Chancellor, Rishi Sunak, has announced that as part of a package of measures to address the economic impact of coronavirus HM Revenue & Customs (HMRC) will provide Time to Pay arrangements to businesses and self-employed individuals in financial distress and with outstanding tax liabilities.
To see if this applies to you, we have prepared a series of questions and answers about how you can access support:
How can I access support?
Support is being provided by HMRC through the creation of Time to Pay arrangements, which can be accessed by calling a dedicated helpline on 0800 0159 559.
What is Time to Pay?
Time to Pay can involve measures, including:
- Agreeing an instalment arrangement for the payment of outstanding taxes;
- Suspending debt collection proceedings;
- Cancelling penalties and interest where you have administrative difficulties in contacting or paying HMRC immediately
What are the criteria for obtaining a Time to Pay arrangements?
Time to Pay arrangements in general are covered by a series internal HMRC manuals, parts of which are heavily redacted.
It is not clear at the moment what criteria HMRC is using with respect to requests for Time to Pay arrangements in circumstances where an individual or business has been affected by the impact of coronavirus. However, the Government has indicated that HMRC’s approach will be more lenient in these circumstances.
HMRC’s general guidance is that it will normally only provide Time to Pay arrangements in where a business or individual “Can’t Pay”, as opposed to where they “Won’t Pay”.
HMRC will ask a series of questions over the phone in order to determine whether someone “Can’t Pay” or “Won’t Pay”.
What might I need to provide?
According to HMRC’s manuals, “Can’t Pay” or “Won’t Pay” status can sometimes be determined only on the basis of a phone call but, at other times, will require detailed cash-flow forecasts before proceeding.
For corporate debt, HMRC asks questions including:
- why the company cannot pay
- what the company’s banking facilities are
- what the company has done to raise money
- what the company does
- what changes the company is making
- what debtors and creditors the business has
- what the company thinks they can afford to pay
- how the company thinks they can repay the debt and pay their on-going liabilities on time.
Meanwhile, individuals will be asked to provide a detailed breakdown of their household expenditure.
HMRC will use this information to determine:
- your financial viability
- the likelihood of a Time to pay arrangement succeeding, and
- suitable enforcement options if Time to Pay is not successful or can’t be agreed.