‘Time to pay’ problems
HM Revenue & Customs (HMRC) provides a rapid response to businesses who request time to pay their tax liabilities, under a scheme known as ‘Time to Pay’ (TTP).
However, the scheme guidelines are sometimes misunderstood. One myth is that TTP cannot cover PAYE liabilities: in fact it can.
Unfortunately, the PAYE computer that issues the penalty warning letters will not know you have set up a TTP arrangement. Even though you may have a TTP arrangement, you could receive a penalty for late payment if the PAYE liability relates to 2010/11.
If you receive a penalty warning letter do not ignore it; you may have to pay the penalty if you do not meet your agreed instalment plan under your TTP arrangement.
Reply to the warning letter, setting out:
The date you requested TTP.
The PAYE months included in the arrangement.
The agreed payment amounts and dates.
All contractors in the construction industry scheme (CIS) have their tax records regularly reviewed to check that they qualify for gross payment status. Your gross payment status is withdrawn if the CIS computer finds you have failed to pay your tax on time. The CIS computer will not know if you have a TTP plan, so any late payment of tax will be marked as a failure. You need to appeal in writing within 30 days against the withdrawal of gross payment status, and your appeal should include all the details of your TTP agreement, as listed above.
Another problem with TTP is caused by the Tax Collector’s computer. This computer has been known to issue distraint (or, Scotland, ‘poinding’) notices to businesses that have arranged TTP for their tax debts. If you receive a distraint or poinding notice you need to take action immediately, or you could have your goods seized by a bailiff or a Sheriff’s Officer. Please contact us for help and further information.