HMRC have announced that from 3rd August 2015, it will be mandatory for all Time to Pay (TTP) arrangements to be collected by direct debit.
TTP arrangements allow selected businesses, who cannot pay their tax bill on the due date, to pay the balance in instalments, over a period that they can afford, ultimately helping many businesses cope with short term cash-flow problems. Arrangements are tailored to the ability of the customer to pay and are typically for a few months, although can be longer. The granting of TTPs are decided selectively, on a case by case basis, by HMRC.
As part of a review of the service, HMRC are now insisting that all new TTP instalments are paid by Direct Debit, stating the following reasons:
- Direct Debit is a more cost effective and secure method of payment.
- It removes the chance that the customer will forget to make payment.
- Payments are more likely to be correctly allocated by HMRC.
- Reduces the need for subsequent customer contact, saving time for the customer and HMRC.
- Direct Debit scheme includes a guarantee to protect the customer.
For those business not able to make payments by Direct Debit facilities, i.e where a bank account will not allow it, then other payment methods may be agreed upon with HMRC, on an exceptional basis.
Existing TTP agreements will not be affected by the new changes.
For further guidance, and for more details on TTP arrangements, please visit www.gov.uk/difficulties-paying-hmrc .