Consequences of Missing HMRC Time to Pay Arrangement Payments

A missed payment can trigger a review of your arrangement.

HMRC may consider factors including:

• how many instalments are outstanding;
• how long payments have been overdue;
• how much is owed;
• whether tax returns remain up to date; and
• whether other HMRC liabilities are being paid.

HMRC may initially contact you or issue a reminder.

However, if the arrangement is not brought back up to date, it can be cancelled.

If a Time to Pay arrangement is cancelled, HMRC may resume normal debt-recovery action for the outstanding balance.

If you know you are going to miss a payment, or have already missed one, contact HMRC as soon as possible.

You should be prepared to:

• explain why the payment has been missed;
• confirm whether the problem is temporary;
• provide updated affordability or cash-flow information; and
• explain what the company can realistically afford going forward.

HMRC may be willing to review an arrangement where circumstances have changed, although it does not have to agree to a reduced payment.

Ignoring the problem is much more likely to make the situation worse.

Yes.

HMRC can cancel a Time to Pay arrangement if the agreed conditions are not met.

This can include:

• missing agreed instalments;
• failing to submit required tax returns;
• failing to pay new tax liabilities; or
• not informing HMRC about a significant change in circumstances.

However, cancellation is not necessarily automatic after a single missed payment.

HMRC may consider the circumstances and whether the arrangement can be brought back up to date before deciding what action to take.

If HMRC cancels the arrangement, the remaining debt becomes subject to normal recovery action.

Depending on the circumstances, this could ultimately include:

• debt collection activity;
• enforcement action;
• demands for payment;
• court proceedings; or
• insolvency action.

The exact action taken will depend on the company’s position and the amount and nature of the debt.

For a wider overview, see our guide to HMRC tax debt.

Possibly.

If a previous arrangement has failed, HMRC may still consider another proposal, but it is likely to look closely at why the original agreement was missed and whether a new arrangement is genuinely affordable.

You should be ready to explain:

• what caused the missed payments;
• what has changed since the previous arrangement;
• what the company can now afford; and
• how future tax liabilities will remain up to date.

If the company is applying for a new arrangement, our guide to how to apply for HMRC Time to Pay explains the process.

If your company has missed a payment:

1. Contact HMRC quickly.
2. Work out why the payment was missed.
3. Update your cash-flow position.
4. Check whether future tax liabilities can still be paid.
5. Seek advice if the arrangement is no longer affordable.

The sooner you act, the more options you are likely to have.