Jennifer Adams examines the new online method of applying for a ‘time to pay’ arrangement.
One success story to come out of HMRC is the ‘time to pay’ (TTP) arrangement. Set up in 2018, HMRC statistics show that over 90% of TTP arrangements are completed successfully, and by the end of November 2024, more than 15,000 self-assessment customers had set up a TTP payment plan for the 2023/24 tax year.
What is a TTP arrangement?
TTP is a service designed to help taxpayers who are struggling to pay their taxes, rather than for those who may be able to pay their tax bill but want more time to do so. It allows taxpayers to spread their tax payments over a period of time (usually 12 months) rather than paying the full amount in one go.
A TTP arrangement can cover all outstanding amounts, including penalties and interest, but is typically only considered for past liabilities after the accounting period/year has ended. This is based on HMRC's belief that the taxpayer is unlikely to be able to see into the future and prove that future liabilities cannot be paid.
Applying online
Until recently, taxpayers had to call HMRC to set up a TTP arrangement. From February 2025, taxpayers with outstanding self-assessment, PAYE or VAT liabilities can apply online but only in specific circumstances. For example, a self-assessment liability must be for £30,000 or less and the taxpayer must have no other payment plans in place or other outstanding tax liabilities.
Tax returns must be up-to-date and, importantly, the application must be submitted within 60 days after the payment deadline. As the agreement will need to be in place before the 60-day deadline, no penalties will be incurred.
Any other liabilities or those taxpayers who have missed the 60-day application window can still apply but via a phone call, as must VAT-registered taxpayers who use any of the special VAT schemes (e.g., the VAT cash accounting scheme or annual accounting scheme).
Application via phone
When phoning, the taxpayer will be put through to a specialist debt department representative trained to assess whether the taxpayer falls under the category of 'won't pay' (refusing to pay despite having the means) or 'can't pay' (unable to pay due to financial circumstances).
HMRC uses a series of ‘negotiating frameworks’ to collect relevant information needed to evaluate TTP requests.
These 'frameworks' aim to determine:
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why the taxpayer cannot pay;
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what actions have been taken to raise the money;
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what their proposed payment arrangements are;
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what assets are available; and
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what changes are being made or actions taken to ensure that they can afford the repayments and ongoing liabilities.
Practicalities
Regardless of how the application is made, a TTP agreement is a formal agreement and confirmation of HMRC's acceptance will be in writing. Should HMRC agree to the TTP request, a proposal or confirmation of the payment terms will be issued to include:
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the amount of tax to be paid;
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the period over which payments will be spread; and
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any additional charges, i.e., interest (8.5% from 6 April 2025) or potential penalties.
TTP arrangements exceeding 12 months are exceptional, although HMRC’s system might suggest a shorter term based on the size of the debt.
Practical tips
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HMRC can collect debts of £2,999.99 or less through a taxpayer's tax code on a mandatory basis if the customer is in PAYE employment or receives a UK-based pension.
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When applying online, there is no requirement to provide a reason for the application, while phone applications will necessitate an explanation of why the application is being made.
Details of the scheme can be found in the ‘Debt Management and Banking Manual’ (www.gov.uk/hmrc-internal-manuals/debt-management-and-banking).
