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Where the taxpayer is unable to pay the tax debt due, it may be possible to negotiate a time to pay arrangement with HMRC. HMRC's guidance on time to pay arrangements can be found in its manuals from DMBM800000 onwards.

These arrangements typically allow the taxpayer to spread the tax debt due over six to 12 months while maintaining ongoing payments in respect of new tax liabilities¹. Exceptionally, periods in excess of 12 months may be considered.

Before a time to pay arrangement can be negotiated, the taxpayer must have²:

1. Ìý

   •ÌýÌýÌýÌý submitted all outstanding tax returns

2. Ìý

   •ÌýÌýÌýÌý approached their bank/building society to obtain support for cash-flow difficulties

3. Ìý

   •ÌýÌýÌýÌý reduced or stop any non-essential expenditure

4. Ìý

   •ÌýÌýÌýÌý approached debtors to collect payment

5. Ìý

   •ÌýÌýÌýÌý liquidated stock

6. Ìý

   •ÌýÌýÌýÌý looked to other sources of debt such as personal loans or credit cards

7. Ìý

   •ÌýÌýÌýÌý approached other creditors for extended terms

HMRC may also request sight of a cashflow forecast for the business or individual³.

Instalments