HMRC Releases New Guidance on Tax Debts

HMRC Releases New Guidance on Tax Debts

Posted: 28/08/2020 11:06

On the 13 August 2020 HMRC issued new guidance on how they treat customers with a tax debt, and that guidance can be viewed here.

Traditionally it has usually been possible to enter into a Time To Pay Agreement with HMRC. In my experience however HMRC always required the debt to be settled in full, over a maximum of twelve months, which clients often found impossible to do given the level of debt involved.

When approaching HMRC with a view to spreading the payments over a slightly longer period, clients always seemed to be met with a flat refusal, even if detailed cashflows and explanations were provided.

HMRC would then advise the client that if they wanted a longer payment arrangement, then they would have to put forward a formal voluntary arrangement via a Licensed Insolvency Practitioner.

In the new guidance HMRC say,

Everyone is different, so the support we offer varies from customer to customer – we tailor our support to their individual needs.

Where customers are facing difficulty in making a tax payment, they should ask us about affordable payment options. We’ll work with them to try and agree a payment plan – called Time to Pay – based on their financial position.

Any tax, duty, penalties or surcharges can be included in a Time to Pay arrangement. We typically have more than half a million arrangements in place at any one time, and 9 out of 10 of them complete successfully.

There is no standard Time to Pay arrangement. We discuss a customer’s specific financial circumstances, look at what they can afford to pay, and then use that to work out how much time they need. There’s no upper limit on the amount of time that someone can have to pay, but we will look for customers to repay their debt as quickly as possible while maintaining affordable payments.


My opinion is that this is welcome news and this new approach, provided HMRC actually follow through and allow clients to pay over a longer period, will greatly assist clients in avoiding formal insolvency action, and will no doubt result in HMRC being able to recover a greater percentage of outstanding tax debt.

If you would like to discuss the issues raised in this article, or any insolvency matter, please do not hesitate to contact Chris Parkman on 01326 340579 or via chris@purnells.co.uk