HMRC Time to Pay moves to direct debit

By David Menzies, ICAS Director of Insolvency

6 August 2015

The Time to Pay (TTP) arrangements for individuals or businesses facing cashflow problems are moving to direct debit, HMRC announces.

HMRC has announced that from 3 August, 2015, it will require all new Time to Pay (TTP) arrangements to be collected by direct debit.

The TTP scheme has been operated by HMRC for a number of years. Where individuals or businesses are experiencing short term cashflow difficulties, and are unable to pay their HMRC liabilities on the due date, they may agree with HMRC to spread payment over a period which can realistically be afforded.

Whilst HMRC said it will always seek the shortest repayment term possible, it may be extended to periods beyond a year in appropriate circumstances.

TTP arrangements are not an automatic right and should ideally be sought before a debt is due.  This will help to avoid penalties or adverse recovery action which HMRC may otherwise take if the debt is not paid on time.

TTP arrangements are subject to a number of conditions which must be adhered to including payment of future liabilities on time and increased payments if circumstances improve during the TTP arrangement period. HMRC will often also require the provision of information to assess the viability of the arrangement before agreeing to it.

Only in exceptional circumstances will HMRC accept the rescheduling of an agreement once negotiated, so it is important that any agreement made is going to be affordable and sustainable for the duration of the arrangement.

In moving to mandatory direct debit collection HMRC said the benefits of paying by direct debit are that it is more cost effective and secure than other payment methods, and provides customer guarantees and protection under the direct debit scheme.

Importantly it will also reduce the possibility that payments will be forgotten and will assist with ensuring the correct allocation of amounts to customer accounts. Alongside this, it is intended to cut the need to contact HMRC, saving time for both the customer and HMRC.


  • Tax
  • Insolvency

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