Time to Pay goes Direct Debit

In order to assist businesses in meeting their tax obligations, HMRC uses a discretionary system called ‘Time to Pay’, which helps debtors spread their payments. The idea is that anyone struggling to pay their tax bill in a lump sum can contact the Tax Man and request a monthly payment plan to spread costs.

Change in payment method – why Direct Debit?

Previously, businesses who had a Time to Pay (TTP) agreement in place made regular payments in any way they chose – for instance, by bank transfer or company cheque if convenient for them. However, from this month, all new TTP agreements will be accompanied by a Direct Debit agreement – the only payment method that HMRC will now accept.

HMRC states that the new change will help automate payments for clients, reducing the chances of missing an instalment. And for tax payers who have other pressing priorities, the chance to automate their interaction with the Tax Man could be a godsend.

Any problems?

For most businesses and sole traders, setting up a Direct Debit should not present any problems at all. However, HMRC has recognised that a very small minority of tax payers may not be able to create a Direct Debit and have (in the small print) suggested that they will provide alternatives on a case by case basis.

If your business is struggling to make tax payments on time you must contact HMRC immediately with a view to setting up a Time to Pay agreement. For further help and advice on your tax, contact the 3 Wise Bears’ expert team and we’ll be happy to talk you through any issues, and your options.