HMRC’s 2026 Approach to Time to Pay: What Directors Must Show to Get a Deal

A Time to Pay arrangement can give a company breathing space when it cannot pay its HMRC liabilities in full immediately.

However, directors should not assume that HMRC will automatically agree to instalments.

HMRC’s current guidance states that, when dealing with a company in tax debt, it will ask how the company intends to pay its tax bill as quickly as possible and will assess whether the proposal is realistic and affordable.

What Does HMRC Want to See?

Directors should be prepared to provide a clear financial picture.

This can include:

• Current bank balances
• Cash-flow forecasts
• Outstanding customer invoices
• Supplier liabilities
• Existing finance
• Other tax debts
• Assets
• Expected future income
• Proposed monthly payments

HMRC may also expect the company to reduce the debt where possible by releasing assets such as stock, vehicles or shares.

The Proposal Must Be Realistic

A common problem is proposing a monthly payment that looks manageable but is not supported by the company’s cash flow.

For example, if a business owes £120,000 but can only realistically generate £5,000 of surplus cash each month, a plan requiring significantly higher payments may not be credible.

Directors need to demonstrate how the proposed payments fit within the company’s financial position.

For professional assistance with preparing and negotiating a realistic repayment proposal, explore our HMRC Time to Pay services. Having a specialist third party involved can provide valuable time and perspective to prepare and refine proposals before presenting them to HMRC.

HMRC May Ask Directors to Contribute

HMRC’s guidance states that directors may be asked to consider putting personal funds into the company, taking lending or extending credit.

That does not mean every director must personally fund the company’s tax debt.

It does mean directors should be prepared to explain what funding options have been considered.

What Happens If the Company Cannot Afford the Payments?

If the company cannot meet the proposed payments, a Time to Pay arrangement may not solve the underlying problem.

The business may need to consider:

• Restructuring
• Refinancing
• Asset sales
• A Company Voluntary Arrangement
• Administration
• Liquidation
• Other insolvency options

Where a Time to Pay arrangement is not viable, directors may wish to explore alternative solutions, such as a Company Voluntary Arrangement (CVA), which can help eligible businesses restructure their debts while continuing to trade.

The Earlier the Better

Waiting until HMRC begins enforcement can significantly reduce the company’s options.

Directors should ideally approach the issue while the company still has viable trading prospects and before cash-flow problems become irreversible.

For specialist advice, speak to one of our advisers. For official HMRC guidance, visit the HMRC official website.