HMRC Time to Pay

The manual, not the myth

HMRC's own debt-management manual is public. DMBM800040 is the page. The principles are blunt.

• Time to Pay is case by case. There is no published menu of terms.
• They only agree it where they are satisfied you cannot pay on the due date. "Will not" is a different conversation, and it ends in enforcement.
• You offer the best schedule you can realistically afford. If trading improves, you are expected to tell them and pay faster.
• They will not agree Time to Pay so that you can use the tax money as working capital to "grow your way out".
• For business taxes, the duration should be less than 12 months. Longer than a year is exceptional and needs a manager.

That last line is the one warehouse brokers skip. A two-year "HMRC plan" sold as if it were a product is either a fiction or a very unusual case. Do not build a refinance model on a Time to Pay that HMRC has not actually agreed, in writing, on a named liability.

File first. Then talk.

You cannot hide behind an unsubmitted return. The liability has to be visible. For VAT, PAYE and Corporation Tax that means the return (or a best-judgment assessment) is on the record. For Self Assessment, HMRC's own newsroom is explicit: a Time to Pay arrangement cannot be set up until the return has been filed. Online plans for personal Self Assessment exist up to a published threshold; company VAT and PAYE are not that button. Do not mix the two up because a forum did.

If the return is late, file it. Then ring. The Payment Support Service is the door for VAT instalments. GOV.UK is the index: start at If you cannot pay your tax bill on time. Take a numbered note of who you spoke to and when. Follow with an email that repeats the offer: amount, dates, Direct Debit, which tax, which period.

Do not let a broker "handle HMRC" if the broker will not put you on the call. HMRC will still come to the directors.

Cannot pay versus will not pay

This is the whole game.

Cannot pay looks like: the cashflow forecast is real, drawings have been cut, the bank statements match the story, other creditors are not being favoured, and the schedule clears the debt in months rather than as a gesture.

Will not pay looks like: directors' drawings are still fat, a connected company is owed "management charges", a dividend went out last month, the VAT number is still collecting from customers who have paid the VAT to you, and you are asking HMRC to wait so you can take a short-term facility that will sweep the same cash.

HMRC can see a lot of that. They are a creditor with better information than most. They also, since 1 December 2020, sit back among the secondary preferential creditors in an insolvency for certain VAT, PAYE and NICs. That restoration of Crown preference (Finance Act 2020) changed the refinance conversation. A structure that used to treat HMRC as just another unsecured creditor is out of date. If someone is still selling you that story, they have not read the last six years.

VAT late-payment penalties

For VAT periods starting on or after 1 January 2023, late-payment penalties run on a clock. Asking for Time to Pay on time can stop the next penalty step. The GOV.UK page How late payment penalties work if you pay VAT late is the one to keep open while you ring. If they agree a plan, it can cover outstanding amounts including penalties and interest. If you then miss the plan, you are back on the clock, and you have spent the one conversation that was available to look like a director who engages.

A plan you cannot keep is worse than a smaller plan you can. Do not offer HMRC a number that only works if a warehouse facility lands on Friday. That is how broken Time to Pay arrangements are born.

What a broken Time to Pay looks like

You miss a payment. You do not ring. A second payment bounces. Enforcement starts again — letters, field force, distraint, county court, statutory demand, winding-up petition. The fact that you "had a Time to Pay once" is not a defence. It is evidence that you were given a chance.

Directors sometimes take a new short-term facility to "catch up HMRC" and then miss the Time to Pay anyway, because the new collections ate the cash that was supposed to go to HMRC. That is stacked debt wearing a tax-hat. It makes the insolvency later, and worse. HMRC can still petition. The new lender can still sweep. You have two collectors on one account.

What Time to Pay is not

• It is not a loan. You are paying tax you already owe.
• It is not breathing space under the Debt Respite Scheme. That scheme is for individuals, not for limited companies.
• It is not a company moratorium under Part A1 of the Insolvency Act 1986. That is a different tool, with a licensed insolvency practitioner as monitor. See Help that is actually there.
• It is not a reason to stop filing the next return.
• It is not cover for paying connected parties, clearing a director's loan, or taking a dividend. Those payments, once insolvency is in view, have their own problems. See Directors in the danger zone.

How it sits on a refinance file

A live, performing Time to Pay is a fact a packager can work with. An unfiled VAT, a broken plan, and a broker's promise to "include HMRC in the new facility" is not. The honest sequence is:

1. File.
2. Offer HMRC a schedule you can keep without a fantasy refinance.
3. If the rest of the stack is what is killing cash, package a structure that lasts — not a third sweep.
4. If the company cannot be rescued, a licensed insolvency practitioner is the adult in the room. HMRC would rather hear that early than after a bounced Time to Pay and a petition.

Strata packages distress-refinance files, including files with HMRC on them. We do not lend. We do not pretend Time to Pay is cheap credit.

Practical script

Before you ring: VAT number, PAYE reference, periods outstanding, amounts, bank balance, what you can pay today, what you can pay monthly, and a one-page list of other creditors. If you cannot produce that, you are not ready, and HMRC will hear it.

On the call: "We cannot pay in full on the due date. Here is what we can pay, starting when, from which account. The next return will still be filed." Then do what you just said.

If they decline: ask what they would need to see. Sometimes it is a larger first payment. Sometimes it is evidence that directors' drawings have actually stopped. Sometimes the answer is enforcement, and then the conversation is insolvency advice, not a warehouse broker.

If Time to Pay is agreed and there is still a refinance that can last once it is in place, that is where Strata comes in. We deal with HMRC as the first layer, not an afterthought, and we will not take a file to a lender until the Time to Pay is real — filed, agreed, and being paid. Strata packages; we do not lend.