What is the HMRC time to pay arrangement?

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## HMRC Time to Pay (TTP) Arrangement

### What the law says

**Definition and legal basis:**
A Time to Pay arrangement is the mechanism under which HMRC may agree to defer payment of a tax liability. The statutory basis for suspending late payment penalties during a TTP arrangement is found in **paragraph 10 of Schedule 56 to the Finance Act 2009**, which provides:

> *"(1) This paragraph applies if— (a) P fails to pay an amount of tax when it becomes due and payable, (b) P makes a request to HMRC that payment of the amount of tax be deferred, and (c) HMRC agrees that payment of that amount may be deferred for a period ('the deferral period')."*

Where a TTP arrangement is agreed and complied with, **no late payment penalty is due** for the period covered by the arrangement. However, if the tax is not paid in line with the conditions of the arrangement, HMRC may issue a further notice making the person chargeable to a penalty under Schedule 56 FA 2009 **as if the arrangement had never been agreed**.

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### HMRC guidance / practice

**What is a TTP arrangement?**
Any negotiated arrangement for payment over an agreed period that runs beyond the due date is known as Time to Pay (TTP). Taxpayers who are unable to settle their liabilities may request to pay by instalments. Each request is considered individually and the taxpayer's circumstances are examined to determine whether a TTP concession can be granted.

**How to request a TTP:**
Where a taxpayer is unable to make payment in full by the due date and is asking for extra time, this is a request for Time to Pay. TTP requests are dealt with by **Debt Management and Banking (DMB)**. Taxpayers can contact DMB by telephone on **0300 200 3820**. [9288b40f0faa9372ecca35735291831dfa61f4e59a51095d588e734e88f57c14, 0f133a406771f133b117c8a716d5e3a56077ede01df556509fa6ee27b537c14f]

**Conditions of a TTP arrangement:**
HMRC guidance sets out the following key conditions:
- The customer must disclose **all** outstanding HMRC debts. If an undisclosed debt is later discovered, the arrangement may be cancelled.
- The customer must have been **honest** about their need for TTP and their ability to pay.
- All **future HMRC returns** must be filed on time.
- All **future liabilities** must be paid in full and on time (though HMRC may amend the arrangement if the customer contacts them before a due date).
- Any **HMRC repayments** due to the customer are expected to be set off against the debt.
- The customer must inform HMRC of any **change in circumstances** affecting their ability to pay.
- **Interest is charged in all cases** where payment is made after the due date, irrespective of whether TTP has been agreed.

**Penalty suspension conditions:**
Schedule 56 paragraph 10 of the Finance Act 2009 allows HMRC to suspend penalties where:
1. HMRC agree to a TTP arrangement;
2. The customer approaches HMRC **before** the date they become liable for the penalty; and
3. The customer **adheres to the terms** of the TTP arrangement.

**Normal course of action during TTP:**
Recovery action that has commenced ceases when an arrangement is agreed. Statements continue to be issued, and late payment interest continues to accrue on all payments made after the due date.

**Cancellation:**
If a customer does not make the agreed payments, or TTP is cancelled for another reason, the penalty/surcharge concession no longer applies and appropriate penalties will be raised **as if there had been no TTP arrangement**.

**Practical note — one arrangement at a time:**
HMRC officers have indicated in practice that normally only **one TTP arrangement is granted in any 12-month period**, and a condition of any arrangement is that future liabilities are paid in full and on time.

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