How to negotiate an HMRC Time to Pay arrangement
HMRC Time to Pay lets a UK business that cannot clear a tax bill in full pay it in instalments, usually over 6 to 12 months, at HMRC's official late-payment interest rate rather than a commercial loan rate. Approval is not automatic: HMRC wants to see a credible cashflow forecast, a clear reason for the arrears, and evidence the business can keep to the plan. Acting before HMRC starts enforcement action, not after, is the single biggest factor in getting a workable arrangement agreed.
Founder & Managing Director, Muswell Rose, FundBiz
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind FundBiz. His background runs through commercial finance, mortgages and fintech, including as managing director of an invoice finance business. He oversees FundBiz's specialty finance comparison and the logic behind how businesses are matched to lenders.
Last reviewed: 1 September 2026
Contact HMRC before the due date, not after
Being proactive is the single most important thing you can do. A business that calls HMRC before a VAT, PAYE or Corporation Tax bill falls due, explains the shortfall and proposes a plan is in a materially stronger position than one HMRC has to chase. Once enforcement action starts (a debt collection agency is instructed, distraint on assets begins, or a winding-up petition is filed for a company), the options narrow and get more expensive. If you already know a bill will be late, call the day you know, not the day it is due.
What to prepare before you call
- A cashflow forecast. HMRC wants to see when the business expects to have the money to pay, not just that it currently cannot. A simple 6 to 12 month forecast showing income, outgoings and the proposed instalment is the core of the proposal.
- The reason for the arrears. A specific, credible cause (a late-paying customer, a seasonal trading dip, a one-off cost) is treated more favourably than a vague "cashflow is tight."
- Your UTR or company tax reference and the specific liability (VAT quarter, PAYE period, Corporation Tax accounting period) the arrangement covers.
- A realistic instalment amount. Propose a figure you can actually sustain every month for the full term. Agreeing to a number you cannot keep to is worse than asking for a longer term at a lower monthly figure.
- A clean recent filing history where possible. A business that has otherwise filed returns and paid on time is a stronger case than one with a pattern of late filing.
What HMRC is actually assessing
For a limited company, HMRC weighs trading viability (is the business a going concern with a real path to clearing the debt), the cashflow forecast, why the arrears arose, and director conduct, including whether any previous Time to Pay arrangement was kept to. A first-time request from an otherwise-compliant business is assessed differently from a repeat request or one following a defaulted arrangement. HMRC has become faster to escalate and less tolerant of a poorly evidenced proposal than in prior years, so a scrappy, unprepared call is more likely to be refused or to prompt closer scrutiny than a properly documented one.
If the request is refused, or a payment is missed
If HMRC declines the proposal, ask specifically what evidence or terms would make it acceptable rather than treating the first answer as final; a revised, better-evidenced proposal is often accepted on a second attempt. If an agreed arrangement is running and a payment is going to be late, contact HMRC before the due date. Missing a payment without warning can see the arrangement cancelled and the full outstanding balance demanded immediately, restarting enforcement risk from a worse position than the original request.
If Time to Pay isn't the right fit
A Time to Pay arrangement is not guaranteed, and HMRC's own timetable will not always match when the bill is actually due. Where speed matters more than the lower official interest rate, or where a request has already been refused, a VAT loan, Corporation Tax bridge or PAYE arrears facility funds against a fixed schedule regardless of HMRC's view of the case.
Compare against a tax bridge or VAT loan →Frequently asked questions
How long can an HMRC Time to Pay arrangement run for?
Most arrangements run 6 to 12 months. HMRC can occasionally agree longer for a company with a credible recovery plan and strong evidence, but a Time to Pay request pitched at more than 12 months faces more scrutiny and a lower chance of approval on the first ask.
What does HMRC actually look at when deciding?
For a limited company, HMRC assesses cashflow forecasts, trading viability, the reason the bill fell into arrears, and director conduct (whether previous arrangements were kept to). A first-time request from a business that has otherwise filed and paid on time is treated more favourably than a repeat request or one following a missed prior arrangement.
What happens if I miss a Time to Pay instalment?
HMRC can cancel the arrangement and demand the full outstanding balance immediately, at which point enforcement action (a debt collection agency, distraint on assets, or a winding-up petition for a company) becomes live again. If a payment is genuinely going to be late, contact HMRC before the due date rather than after it; a proactive call is treated very differently from a missed payment discovered after the fact.
Should I negotiate Time to Pay myself or use an adviser?
A straightforward, first-time request for a modest sum is usually fine to handle directly by phone. A larger liability, a repeat request, or a business already showing wider financial distress benefits from an accountant or insolvency practitioner presenting the cashflow forecast, since a poorly evidenced proposal can prompt faster escalation rather than more time.
Is Time to Pay cheaper than borrowing?
Often, yes. Time to Pay charges HMRC's official late-payment interest rate, which moves with the Bank of England base rate (currently 3.75%) and is usually below a commercial loan's rate. The trade-off is that a Time to Pay request can be refused, takes a real conversation with HMRC to arrange, and a missed instalment escalates fast. A loan funds on a fixed schedule regardless of HMRC's view of your case. Compare both before you commit.
Related
See the full HMRC tax funding hub, the direct VAT loan vs HMRC Time to Pay cost comparison, or the Corporation Tax bridge and PAYE arrears funding pages.
This is general information, not tax or legal advice. Last reviewed: 1 September 2026. By Adam Parker. Reviewed by Oliver Mackman. FundBiz is an independent comparison and introducer service, not a lender, and does not guarantee approval.