A Time to Pay Arrangement is where HMRC agrees to allow you more time to pay your tax bill. This can only happen if you notify HMRC that you won’t be able to pay the tax bill by its due date and you set out a reasonable schedule in which to pay the bill. HMRC will check your income and expenditure or cash flow to determine if you can actually pay them the correct amount.
The case of BW Hills Southbank Limited deals with an important point of interpretation of Section 108 of the Finance Act 2009. This relates to the default surcharges and their interaction with the time to pay agreement. The tribunal ruled that the taxpayer or firm is exempt to the default surcharge if it asks HMRC for a time to pay scheme before the tax due date.
In the case above the taxpayer had asked for a time to pay scheme before his tax due date but HMRC had not approved it yet. HMRC argued that as it had not yet approved the time to pay scheme until after the deadline the taxpayer should still have to pay the default surcharge as his tax payment was still outstanding by the deadline. The tribunal in response to this stated that the deadline for the tax payment is stopped as soon as the taxpayer contacts HMRC and asks for a time to pay scheme. It also stated that it could see no justification in allowing HMRC to be able to collect more surcharges by delaying these types of agreements.
If you have any concerns, contact us for further advice.
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Information from: CCH Daily