Will HMRC accept a payment plan?

A payment plan with HMRC is an arrangement that allows you to pay your tax debt in instalments rather than a lump sum.

It’s a flexible option designed to help taxpayers who are facing temporary financial challenges.

While it can provide relief, you should understand that HMRC has certain criteria for approving payment plans.

Can I Set Up a Payment Plan Online?

Yes, you can set up a payment plan online if:

1. Your tax debt is £30,000 or less.
2. Your tax return is up-to-date.
3. It’s within 60 days of the payment deadline.
4. You don’t have any other outstanding payment plans or debts with HMRC.

If you meet these criteria, you can usually set up a payment plan directly through your online HMRC account.

However, if you don’t qualify for the online service, you’ll need to contact HMRC directly to discuss your options.

How Does HMRC Decide if I Qualify for a Payment Plan?

HMRC will assess your financial situation to determine if you qualify for a payment plan.

They’ll consider factors such as:

1. The amount of tax you owe: Smaller debts are more likely to be approved for online payment plans.
2. Your income: HMRC will assess your ability to make regular payments.
3. Your outgoings: This includes essential living costs like rent, mortgage, and utilities.
4. Your assets: HMRC may consider the value of your possessions.

It’s important to be honest and transparent about your financial circumstances when discussing a payment plan with HMRC.

How Long Can a Payment Plan Last?

The duration of a payment plan varies depending on your individual circumstances.

Typically, HMRC offers payment plans of up to 12 months, but this isn’t a fixed term.

If your situation warrants a longer payment plan, you can negotiate this with HMRC.

What if I Miss a Payment?

Missing a payment on your HMRC payment plan can have serious consequences.

HMRC may take enforcement action, such as issuing a payment notice or instructing a debt collector.

To avoid this, it’s crucial to make every effort to stick to your agreed payment plan.

If you anticipate difficulties making a payment, contact HMRC immediately to discuss your options.

Can HMRC Reject My Payment Plan?

Yes, HMRC can reject your payment plan if they believe you won’t be able to stick to the agreed payments.

They may also reject a plan if they feel the proposed payment amounts are insufficient.

If your payment plan is rejected, HMRC will discuss alternative options with you, such as increasing the payment amount or reducing the payment term.

What if I Can’t Afford the Payment Plan?

If you find that you can’t afford the agreed payment plan, contact HMRC as soon as possible.

They may be able to adjust the terms of the plan or offer alternative support.

It’s important to avoid falling behind on payments, as this can lead to more significant problems.

What Are the Alternatives to a Payment Plan?

If a payment plan isn’t feasible, HMRC offers other options to help you manage your tax debt. These include:

1. Time to Pay for Self-Assessment: A special scheme for self-assessment tax debts.
2. HMRC Help to Pay: A support service for those struggling to pay income tax.
3. Debt Relief Orders: Suitable for individuals with low income and assets.
4. Bankruptcy: A formal insolvency procedure as a last resort.

It’s important to explore all available options before making a decision.

What if I Don’t Pay My Tax Debt?

Ignoring your tax debt is not advisable. HMRC has the power to take enforcement action, which can include:

1. Charging interest and penalties: These can increase your debt significantly.
2. Issuing a payment notice: This gives you a final opportunity to pay before further action.
3. Using a debt collector: HMRC may employ a third-party agency to recover the debt.
4. Taking control of goods: In severe cases, HMRC can seize your assets to settle the debt.

It’s important to address your tax debt promptly to avoid these consequences.