HMRC Tax – Time To Pay Debt Solution

HMRC Tax – Time to Pay Debt Solution


If you cannot afford to pay your HMRC tax bill in full and on time, HMRC may agree to pay by instalments. Sometimes, there may be a Debt Collection Agency on behalf of HMRC to collect tax bills. 

Debt Collection agencies can contact you to collect your HMRC tax bill from previous years. They also aim to collect a debt in a stipulated time frame and normally do not allow you to enter into a long term payment plan. This is due to the nature of HMRC debt as a priority debt.

Make sure that you consider all the issues such as filing all your tax returns, penalty appeals, estimated demands, and payments on account, as described in the earlier sections of this guide.

Although tax should normally be paid when it falls due, self-assessment tax is due to be paid by 31 January and 31 July each year to avoid penalties.

Interest will be added to HMRC debt, although the amount involved may be small. Unlike some creditors, HM Revenue and Customs have no discretion over the amount of interest charged. It cannot “freeze” the interest to help you to clear the debt.

A debt management plan helps when you are struggling with unpaid HMRC tax bills in the following ways:

  • An arrangement to pay via monthly payment
  • Suspension of enforcement to collect the debt via court routes (Subject to agreed terms)

hmrc - time to pay - debt solution


Agreeing on Debt Management Plan (Time to Pay)

You will need to agree to a payment plan with the Debt Solution Company. The plan must cover not only the tax currently outstanding but also any future tax liabilities as they arise during the period of the plan. This would include “payments on account” in January and July if you were self-employed.

HMRC does not want you to fall behind again on your future tax bills which means you must pay your current and future HMRC tax when it becomes due. And also pay/maintain your DMP plan arrangement for your old/HMRC tax arrears at the same time.

It is very important to prepare your suitability/reason why the letter to explain your situation/circumstances which caused the issue of non-payment when HMRC tax became due for payment.

There are other reports which your debt advisor would prepare in preparation of your case which includes an I/E summary, assets summary, income proofs, past 12-month bank statement assessment, health report summary, disposable income, 64-8 form and personal report summary.

You may receive a positive response if there are exceptional. If they contain unforeseen reasons why you cannot pay, such as a sudden illness or time to pay arrangement due to the sale of assets in the process.

HMRC may refuse requests for a payment plan if it appears that such requests are being made as routine.

Time to Pay Arrangement

  • The principle of a Time to Pay Arrangement is to allow a company to repay the outstanding liabilities for VAT, PAYE and Corporation Tax in affordable instalments as opposed to in one go
  • An arrangement will usually last a period of up to twelve months but can be longer if HMRC agrees. Discuss your case for expert advice with a debt advisor.
  • The arrangement is beneficial to both parties if the alternative is for the Company to close. HMRC will receive payment in relation to the debts due and the Company will be granted time to help improve its financial position
  • It is important that the payments you propose to make are realistic and affordable and the arrangement has a good chance of being successful. Kindly note HMRC Tax debt is a priority debt and you cannot miss it for long.
  • Seeking a Time to Pay Arrangement will defer HMRC’s action in seeking enforcement against you and your company.
  • Often having a financial plan in place will ensure you and your company gets back on track

If Your DMP is Accepted (Time to Pay Arrangement)

HMRC debt management office or a debt collection agency appointed by HMRC agrees to your request for time to pay, you should receive confirmation of this in writing.

If you receive a verbal agreement at a meeting or on the telephone, ask for it to be confirmed in writing. If not, there could be difficulties later if there is a dispute over exactly what was agreed.

Debt solution companies understand the importance of getting written confirmation and they ensure that they receive confirmation of arrangement and take a note of demand raised by HMRC from the taxpayer.

Having an agreed payment plan in place will mean that you avoid further late payment penalties.

If HMRC Rejects Your Proposal

HMRC Debt management has a duty to consider your proposal.

If you believe that it has been rejected out of hand, without being properly considered, you can make a complaint and ask for your proposal to be referred to a more senior official and for a full response in writing.

If you are unable to handle the situation, do not waste time and contact a suitable debt advice company for help.

HMRC has a dedicated office at the Royal Court of Justice – London to deal with insolvency matters with people who do not pay their HMRC tax bills and avoid unnecessarily. There are hundreds of bankruptcy applications heard on a regular basis to declare defaulters bankrupt.

If you have received a statutory demand under section 268(1) (a) for the insolvency act 1986, You must contact a debt solution company to deal with the situation on an urgent basis.

Acme Credit Consultants can offer you free and confidential HMRC debt advice and it comes without any obligation to take their services.


If you fail to agree on a payment plan with HMRC and the debt management team then recovery action is likely to be taken.

Recovery action may include legally taking control of goods, removal of funds from your bank account (called Direct Recovery of Debt – England, Wales, and Northern Ireland), Court action in the Magistrates’ Court or County Court, or Bankruptcy proceedings at Royal Court of Justice.

It is likely to increase your legal cost at a significant level on top of your tax bill.

Time to Pay Arrangement – Other Ways

Lump Sums

HMRC does not offer partial settlement in your tax bill, but it always does help to pay a lump sum to reduce your tax bill as it gives confidence to your debt solution company to prepare your payment plan in a way that it could justify your case to HMRC towards time to pay arrangement.

It also shows your willingness to pay HMRC tax as a priority over your savings.

For example, John owes £30,000 in self-assessment tax and offers via debt Solution Company to pay a disposable income of £600.00 per month. He does have savings of £18000.00 in his personal account, which he also offers as a lump sum to pay towards it. HMRC will take this case as a positive sign towards paying tax bills and would consider agreeing to time to pay the plan.

Agreeing to pay an affordable /disposable payment

When making a proposal, be careful not to offer more than you can afford.

If you fall behind with an agreed schedule of payments, HMRC may end the agreement. Sometimes HMRC will only agree a further time to pay if they also have a court order against you.

Your debt advice company must be informed if you know in advance that you are likely to miss a payment due to income loss so that your debt solution company could try to negotiate with HMRC well in advance.

If you are planning to sell your BTL asset, please inform your debt advisor about it as they can get extra time to hold HMRC to prevent enforcement recovery.

Freezing of Interest 

HM Revenue and Customs cannot agree to “freeze” interest on the tax. HMRC is obliged by law to charge interest.

So do not expect it in the same way as your other unsecured debt under a debt solution plan, which aims to freeze all interest and charges on your debt account.


I Hope, this was helpful to you and has assisted you to take up the right decision for your finances. Taking the right decision at the right time can save you from disaster and help you come out of the predicament.

Acme Credit Consultants Ltd is regulated by the Financial Conduct Authority (FCA) to offer suitable debt advice ON YOUR DEBT PROBLEMS.

You can contact their debt advisors on 0203 318 0990 for a free and no-obligation personal appointment to discuss your full case, HMRC tax bill and current enforcement action by HMRC against you.

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  • Rajnish Tyagi

    Rajnish Tyagi possesses certification as a qualified debt advisor and specializes in writing about debt management and related topics. His aim is to assist individuals in comprehending and effectively managing their debts and credit issues. Additionally, Rajnish Tyagi holds the position of managing principal at "Acme Credit Consultants Ltd," an FCA regulated firm that provides tailored debt solutions to both individuals and businesses facing financial challenges.

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