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Easing the Way: The New Self-serve Time to Pay Arrangement for VAT-Registered Businesses

Updated: Oct 16, 2023


For several years, taxpayers within Self Assessment have had the provision to establish a Time to Pay arrangement online, thereby permitting the payment of their tax bills in instalments when full and immediate payment is not feasible. This online service, allowing for greater flexibility and convenience in tax payments, has recently been expanded to include VAT-registered businesses.


A New Horizon for VAT-Registered Businesses:

VAT-registered businesses, amidst their varied operational challenges, can sometimes struggle to pay the VAT owed promptly. Recognising this, HMRC has facilitated the online setup of Time to Pay agreements, a development from the previous necessity to contact HMRC to establish such arrangements. These agreements grant businesses the ability to pay their outstanding VAT in more manageable instalments, collected via direct debit, reducing the financial strain on businesses.


Eligibility and Use:

To utilise the self-serve online facility, several conditions must be met:

  1. The business must have filed its last VAT return.

  2. The outstanding amount should be £20,000 or less.

  3. The application must be within 28 days of the payment deadline.

  4. The business should not have any existing payment plans or debts with HMRC.

  5. The business must plan to settle the amount owed within six months.

However, businesses employing the VAT cash accounting scheme or the VAT annual accounting scheme, and those making VAT payments on account, are precluded from using this online service.

To initiate a payment plan online, businesses need to sign into their Government Gateway account, and as a direct debit setup is requisite for collecting the payments, this step is imperative to be executed by the businesses themselves. While advisors can provide guidance through the process, they cannot execute this step on behalf of the business.


Alternate Arrangements:

Businesses not meeting the eligibility criteria for the online service or those unable to self-serve can still explore the possibility of agreeing to an instalment plan with HMRC. In such instances, direct contact with HMRC is essential, which can be done by calling the VAT payment service at 0300 200 3831.


Conclusion:

The extension of the self-serve Time to Pay arrangement to VAT-registered businesses marks a significant step in simplifying the tax payment process, granting businesses the autonomy to manage their tax payments efficiently. While the facility comes with its eligibility criteria, it symbolises progress in rendering tax payment procedures more adaptable and user-friendly. For those unable to use the service, alternative arrangements remain a viable option, ensuring that every business has a route to manage its tax obligations effectively.


Partner Note:

For more details and guidance on dealing with difficulties in paying HMRC, please refer to www.gov.uk/difficulties-paying-hmrc.

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