How to set up a payment plan for your taxes with HMRC
The government is helping businesses by allowing you to defer tax payments.
HMRC has a dedicated phone line to agree payment plans for taxes:
- The number you need to call is 0300 200 3835. The line is open between 8am and 4pm Monday to Thursday (excluding Bank Holidays).
- A director or owner of the business has to call to discuss payment with HMRC.
- You will need to explain why you need to delay payment of your taxes, e.g. cancelled contracts, travel plans or staff absences due to self-isolation.
- Please make sure that all of your tax filings are up to date.
Deferred VAT payments
Businesses that deferred VAT payments due between 20 March 2020 and 30 June 2020 were able to either:
- Pay in full by 31 March 2021.
- Join the online VAT deferral new payment scheme by 21 June 2021 to spread payments of deferred VAT over smaller, interest-free instalments.
- Contact HMRC to make an arrangement to pay by 30 June 2021.
You might be charged a 5% penalty or interest if you did not pay in full or make an arrangement to pay by 30 June 2021.
What non-VAT payment plans HMRC agree to:
Every situation is different, and what HMRC agrees for you will depend on your current situation and your history with them. There are no rules to go by. However, a number of our clients have been able to:
- Defer PAYE for three months.
- Spread Corporation Tax payments over a year.
The information to have handy when calling HMRC:
- Company registration number.
- Company address.
- Company telephone number.
- Company Unique Tax Reference – if discussing Corporation Tax.
- PAYE and accounts office reference numbers – if discussing PAYE.
- VAT registration number and the figure from box five of your latest VAT return filed (it needs to be filed) – if discussing VAT.
A few practical points:
- If you have any indication that you won’t be able to stick to the agreed plan, please communicate with HMRC as they can renegotiate the dates and amounts.
- HMRC may insist on Direct Debit collections.
- HMRC are happy to process refunds for personal tax if it is evident that there won’t be a liability at the end of the tax year.
Here are the usual questions HMRC like to ask and some reasons why:
- What is the cause of the cash shortage? Usual answers would be as above or delayed payments from clients or bad debts, delayed receipt of a grant, etc
- What have you done to ensure this won’t happen again – is it worth having a cash flow forecast drafted for the next few weeks?
- Have you approached your bank or tried to obtain credit at some other places? HMRC want to make sure that they are not used as a free credit facility.
- Have the directors been taking drawings/dividends from the company? HMRC would like to ensure they are not at the end of the payees’ list. They accept the fact that salaries/overheads are the priority, but not after drawings/dividends.
- Are you up to date with all other taxes? If not, they will be looking to pass the call to debt management, who can agree on a plan for the whole debt.
- What and when can you pay? Please be prepared to commit to some dates and amounts. Ideally, HMRC would like some of the debt to be paid within the deadline, as this increases their debt recovery chances and shows goodwill.
HMRC is operating on reduced staff numbers and is working relentlessly to help as many callers as they can – usually, we find, the nicer we are to them, the more willing they are to help.
Make a cup of tea and be prepared for at least an hour-long wait on hold, probably longer. Please contact us if you need a hand with any information above, or you’d like to chat through your approach to the call before picking up the phone.