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Markel Tax

11 Mar 2020

Budget 2020: Time to Pay

In order to provide continuity for those businesses and self-employed individuals affected by COVID-19, HMRC intend to give tax-payers more time to pay existing liabilities, where they are affected by the pandemic. This will have been welcome news to many concerned tax payers who have faced a decline in their business as a result of the uncertainty caused by COVID-19

What it was before

Time-to-Pay (‘TTP’) is a long-standing facility that provides the Collector with flexibility, allowing them to give businesses up to 12 months to pay existing debt and individuals even longer, where there was justification, rather than allowing a debt to proceed to enforcement. TTP agreements are binding on HMRC and protect against late payment penalties, but interest will continue to accrue on unpaid debts.

What it is now

With immediate effect, HMRC have made 2,000 further staff available to man a dedicated hotline for those who are experiencing hardship due to COVID-19. Payment terms given to taxpayers under TTP will be decided on a case-by case basis.

HMRC have committed to waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or making payment due to COVID-19.

It is possible that HMRC will relax the 12-month limit for businesses and it is possible that Collectors will receive instructions to relax any evidential requirement guidance.

It is likely that the 2,000 staff will be existing Collectors, diverted from their usual duties to prioritise these calls.  

It is notable that Finance Act 2008 introduced provisions to formalise the response to ‘special situations’ in terms of limiting interest and also that TTP arrangements already protect taxpayers from surcharges and late payment penalties.  However, it will be no-doubt a comfort to many taxpayers for HMRC to recognise the COVID-19 issue as a ‘special situation’ and for this to be brought to their attention by inclusion in this Budget.

Who is affected

These measures will impact businesses and self-employed individuals who are impacted by COVID-19. However, other tax-payers who do not fall into these categories but who are experiencing issues with administration preventing payment or hardship as a result of COVID-19, would be advised to call the helpline, to see if they qualify.


Next article in series

11 Mar 2020

Budget 2020: First thoughts