How to Set Up a Time to Pay Arrangement With HMRC When You Can’t Pay Your Tax Bill

There comes a moment in almost every creative business where cashflow gets tight. Maybe a big client paid late, maybe a project over-ran, or maybe you simply had a quieter quarter than expected. Whatever the reason, you open the HMRC payment reminder… and your stomach drops.

If you don’t have the funds to pay your tax bill, the worst thing you can do is ignore it. HMRC are far more understanding than most people expect — as long as you talk to them early. That’s where a Time to Pay (TTP) arrangement comes in.

Here’s a simple, step-by-step guide to setting one up.

1. What a Time to Pay Arrangement Actually Is

A Time to Pay arrangement is an agreed instalment plan with HMRC that allows you to spread your tax bill over a longer period — usually up to 12 months, sometimes longer depending on circumstances.

You’ll still pay interest (currently 7.75% for late tax payments), but you’ll avoid penalties as long as the arrangement is in place and you stick to it.

TTP can be used for:

• Self Assessment tax

• Corporation Tax

• VAT

• PAYE and NIC

• CIS liabilities

2. Check If You’re Eligible for HMRC’s Online Service (Self Assessment Only)

If your problem is a Self Assessment bill, HMRC offer a very quick online tool, as long as you meet all of the following:

• Your tax return has already been submitted

• You owe £30,000 or less

• You have no other payment plans with HMRC

• You have no other outstanding tax debts

• You’re looking to set up the plan within 60 days of the payment deadline

If that’s you, you can set it up in minutes via your Government Gateway account without speaking to anyone.

If not, skip to step 3.

3. If You Can’t Use the Online Tool — Call the HMRC Payment Support Service

For everything else — Corporation Tax, VAT, PAYE, or Self Assessment over £30k/with other debts — you’ll need to speak to HMRC.

The number to call:

HMRC Payment Support Service – 0300 200 3835
(Mon–Fri, usually 8am–6pm)

This is not a scary conversation. The team handles thousands of these requests every week.

They’ll ask you about:

• The type of tax you owe

• How much you can pay now (even a small amount helps)

• When you think cashflow will improve

• Your business income and outgoings

• Whether you’ve had a TTP agreement before

Think of it like a cashflow chat — not an interrogation.

4. Prepare Before You Contact HMRC

Whether online or by phone, being prepared massively increases your chance of approval.

Have the following ready:

• Your UTR (Self Assessment) or Company UTR

• Details of the tax you owe

• Your Government Gateway login

• A proposed repayment amount (realistic, not optimistic)

• Evidence of current cashflow — e.g. upcoming invoices, bank balance

• Details of any unexpected events that led to the problem

If you’re a creative freelancer or agency owner, be honest about the project pipeline. HMRC don’t expect you to be perfect — they just want confidence that the plan is affordable.

5. Be Realistic With What You Offer

If you owe £6,000, the instinct might be to clear it in three months. But if cashflow is tight, that’s a fast track to defaulting — which could make things worse.

A more realistic example might be:

• £500 upfront

• £450 per month for 12 months

HMRC would much rather agree to something you can stick to.

6. Once the Plan Is Agreed

HMRC will confirm:

• The monthly amount

• The payment date

• How long the arrangement will last

• When interest will be applied

Make sure:

• You pay by Direct Debit if possible

• You never miss a payment

• You file all future returns on time (late filings can cancel the plan)

• You keep HMRC updated if anything changes

If you do miss a payment, call them immediately — they’re usually reasonable if you get ahead of the issue.

7. Special Note for Limited Companies

If you run a creative agency or production company, TTP can be a lifeline during seasonal dips or unexpected cost overruns. You can request arrangements for:

• Corporation Tax (after the return is filed)

• VAT

• PAYE/NIC (HMRC is stricter here but still open to arrangements)

HMRC may ask for more detailed business financials, especially if the plan is over 12 months.

If your company is already in arrears on multiple taxes, speak to your accountant first — it may be better to restructure, refinance, or negotiate a more formal arrangement.

8. Things That Might Help Your Case

HMRC are more likely to agree if:

• You’ve paid something upfront

• You’ve kept previous tax filings up to date

• You’ve never defaulted on a TTP before

• You can clearly explain why the issue arose and why it won’t continue

What doesn’t help:

• Saying “I’ll pay when I can”

• Being vague about your cashflow

• Avoiding the call and hoping it goes away

9. Don’t Let Shame or Fear Stop You

Struggling to pay a tax bill doesn’t mean you’re bad with money.

It means you are running a business.

Late-paying clients, seasonality, equipment failures, illness, childcare… every creative I know has had at least one moment where cashflow went sideways.

HMRC designed Time to Pay for exactly this situation.

Final Thoughts

If you can’t pay your tax bill in full, a Time to Pay arrangement can be the difference between a temporary setback and a full-blown crisis. The sooner you act, the more options you’ll have — and the less stressful it will be.

If you want help preparing for the call, working out what you can afford, or building a cashflow forecast that aligns with your plan, we can support you.

Just ask.