If you have reached the end of a dispute with HMRC and the tax, interest and penalties have been agreed then you may find that you do not have the funds available to settle the amount in one go.

HMRC are within their rights to pursue this debt and have the power to enforce the sale of assets to finance the liability or, at the extreme, make a taxpayer bankrupt. This is clearly best avoided, particularly since the reputational damage can be significant.

HMRC would always rather facilitate the continued operation of a business (if only so that they continue to receive annual tax revenues!) so are often open to discussing payment options if it is possible for the taxpayer to settle their liabilities over a set period of time, rather than going bankrupt trying to make a lump sum payment.  The same applies to an individual. This process is called ‘time to pay’.

Before considering a time to pay arrangement, HMRC would expect to review the taxpayer’s financial position very carefully to ensure that the client will be able to fund any agreement reached. They would also expect the taxpayer to use every possible way to meet their obligations and pay the tax, interest and any penalties that are due in one lump sum.

These financial checks can be detailed and intrusive. Getting an industry-recognised specialist involved can mitigate many of HMRC’s concerns and can make the process of agreeing time to pay run a lot smoother.

There is a relatively short period of time at the end of an enquiry or investigation when agreeing a time to pay arrangement with the Inspector is possible. Once a debt has been passed to HMRC’s “Debt Management” department, it can be much harder to negotiate a payment plan. It is always better to speak to a specialist as soon as possible.

Nevertheless, if you or your client have been contacted by Debt Management then do get in touch as there are still options. We are used to dealing with Debt Management and, put simply, we know that they will and will not accept.


At Lancaster Knox our Tax Investigation specialists are industry recognised and have established relationships with HMRC.  We are adept at managing interactions with HMRC to ensure that the process runs smoothly and that the client’s interests are best protected.

Lancaster Knox will work with you and, where relevant, your current adviser to discuss payment options and, where relevant, will negotiate a time to pay arrangement with HMRC.