If your limited company cannot pay an HMRC liability in full, you may be able to apply for a Time to Pay arrangement and spread the debt through agreed instalments.
The key is to present HMRC with a realistic proposal based on what the company can genuinely afford.
💡 Quick Answer
To apply for HMRC Time to Pay, work out exactly what the company owes, prepare realistic income and expenditure figures and decide what the business can genuinely afford to repay.
HMRC may ask why the debt arose, how much can be paid immediately, what monthly instalment is affordable and how future tax liabilities will be kept up to date.
Before You Apply for HMRC Time to Pay
Before contacting HMRC, make sure you understand the company’s current financial position.
You should know:
- how much the company owes;
- which taxes are outstanding;
- whether returns are up to date;
- what cash is currently available;
- what other creditors are owed; and
- what the company can realistically afford each month.
For a broader explanation of eligibility and how these arrangements work, see our main HMRC Time to Pay guide.
Step 1: Work Out Exactly What the Company Owes
Start by identifying the full HMRC balance.
This may include:
- PAYE and National Insurance;
- VAT;
- Corporation Tax;
- CIS liabilities;
- interest; and
- penalties.
Do not base the proposal on just one overdue tax if the company has other HMRC liabilities that also need dealing with.
Step 2: Prepare Income and Expenditure Figures
HMRC may ask for information about the company’s income, spending, cash flow and ability to repay.
Prepare realistic figures showing:
- expected income;
- essential business costs;
- current debts;
- upcoming tax liabilities; and
- available disposable cash.
The aim is to show what the company can genuinely afford after necessary operating costs.
Step 3: Decide What the Company Can Afford to Pay
Work out:
how much can be paid immediately + what monthly payment is sustainable.
Do not simply choose the lowest possible figure.
The proposal should be realistic enough to clear the debt while allowing the company to continue meeting its ongoing liabilities.
If the company cannot afford both the historic HMRC debt and future taxes, a Time to Pay arrangement may not solve the underlying problem.
Step 4: Contact HMRC or Apply Online
HMRC provides an online payment-plan service for eligible cases.
Where the company cannot use the online service, you will need to contact HMRC and discuss the proposal directly.
Be prepared to explain:
- what the company owes;
- why it cannot pay in full;
- what can be paid immediately;
- what monthly payment is affordable; and
- how future tax liabilities will remain up to date.
Keep the relevant figures in front of you during the discussion.
What Information Might HMRC Ask For?
Depending on the circumstances, HMRC may ask about:
- company income and expenditure;
- bank balances and facilities;
- debtors and creditors;
- available assets;
- what steps have been taken to raise funds;
- how the debt arose; and
- how the company intends to remain compliant going forward.
For corporate debts, HMRC may use a Corporate Debt Questionnaire to guide the discussion.
What Happens If HMRC Accepts the Proposal?
Once the arrangement is agreed, the company needs to stick to its terms.
That normally means:
- making instalments on time;
- submitting returns when required;
- paying new tax liabilities; and
- contacting HMRC if circumstances change.
If the business starts missing payments, see our guide to what happens if you miss HMRC Time to Pay payments.
What If HMRC Refuses the Application?
HMRC does not have to accept a Time to Pay proposal.
A request may be refused where HMRC is not satisfied that:
- the repayments are affordable;
- future tax liabilities will be paid;
- the repayment period is reasonable; or
- sufficient financial information has been provided.
If the company cannot afford a realistic repayment proposal, directors should consider whether the problem is more serious than a temporary cash-flow shortage.
If your application has already been rejected, read HMRC Refused Time to Pay? What Directors Should Do Next before making another proposal.
Possible alternatives may include:
You can also read our broader HMRC tax debt guide.
Get Help Before Applying for HMRC Time to Pay
A strong Time to Pay application starts with a realistic understanding of the company’s financial position.
Business Helpline provides free, confidential initial advice to limited company directors dealing with HMRC arrears.
We can help you assess whether a repayment proposal appears affordable or whether another rescue or insolvency option should be considered.
Call our free 24-hour helpline on 0800 088 2142 or request a confidential call back.
HMRC Time to Pay Application FAQs
Can I Apply for HMRC Time to Pay Online?
Potentially. HMRC provides an online payment-plan service for eligible cases. Where an arrangement cannot be set up online, the company will need to contact HMRC.
What Information Do I Need?
Have details of the tax debt, income and expenditure, available cash, other liabilities and the monthly amount the company can realistically afford.
How Much Should I Offer HMRC Each Month?
The proposal should reflect what the company can genuinely afford after essential business costs and future tax liabilities.
What If I Cannot Afford the Payments HMRC Wants?
Do not agree to a payment that the company cannot realistically maintain. If the business cannot afford a sustainable arrangement, wider restructuring or insolvency advice may be needed.
