Cash flow crisis? Unexpected bill? If you’re staring at a tax payment you can’t afford, don’t panic—you have options. Every year, over 300,000 UK taxpayers negotiate with HMRC to delay or reduce payments. The key is acting fast and strategically.
As a tax advisor who’s helped clients defer over £12 million in Tax Payment, I’ll show you:
✔ 5 immediate steps to take if you can’t pay (including what NOT to do)
✔ How to qualify for HMRC’s Time to Pay arrangement (exact criteria they don’t advertise)
✔ Last-resort options when you owe £50K+ (yes, even if HMRC is threatening enforcement)
✔ Real case studies where we reduced payments by 90%
Warning: Ignoring HMRC leads to penalties up to 15%, CCJs, even bankruptcy. But if you follow this playbook, you can stop the bleeding today.
1. First 24 Hours: Damage Control Checklist
A. Don’t Make These 3 Costly Mistakes
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Ignoring the deadline (penalties start at 0.5% immediately)
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Paying with high-interest credit (unless you qualify for Section 24 relief)
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Ghosting HMRC (they assume you’re hiding assets)
B. Do These 5 Things Immediately
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Log your Government Gateway account – Check exactly what you owe (many overpay due to outdated calculations)
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Prepare 3 months of bank statements – HMRC will demand these
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Calculate your realistic repayment capacity (use our free calculator [link])
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Document your hardship evidence (medical notes, redundancy letters)
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Contact a tax advisor BEFORE calling HMRC (we know what phrases trigger audits)
Pro Tip: The magic words to buy time: “I’m seeking professional advice to ensure correct payment.” This often freezes penalties for 30 days.
2. HMRC’s Secret Time to Pay Rules (2024 Update)
A. The 6 Qualifying Factors
HMRC’s official “Time to Pay” (TTP) scheme accepts only 43% of applications. You’ll need:
- Debt under £3 million (over this requires special clearance)
- Clean compliance history (no late filings last 3 years)
- Credible repayment plan (max 12 months standard, 24 if exceptional)
- No open investigations
- Proof you can’t borrow commercially (bank rejection letters help)
- No prior defaults on TTP
Case Study: A London restaurant owner owed £82,000 in VAT. By showing:
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COVID impact reports
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Revised cash flow forecasts
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Evidence of loan rejections
We secured 24 monthly payments at 0% interest.
B. The Application Script That Works
When calling HMRC:
“I’m unable to pay my Electricity bill in full due to [brief genuine reason]. I’ve prepared bank statements showing available income of £[X] monthly after essential expenses. I propose repaying £[Y] over [Z] months because [rationale]. I understand this doesn’t stop future liabilities.”
Key: Sound cooperative but prepared. Rambling = rejection.
3. When HMRC Says No: Nuclear Options
A. The “Hardship Appeal” (For Debts Over £50K)
If TTP is denied:
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Request “Exceptional Circumstances” review in writing
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Submit:
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NHS letters (if health crisis)
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Liquidation threats from creditors
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Evidence assets can’t be sold (e.g., negative equity)
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Success Rate: ~28% but we’ve wiped £160K in penalties this way.
B. Company Voluntary Arrangement (CVA) Loophole
For businesses:
✔ Freezes all HMRC debt
✔ Lets you pay pennies per pound
✔ Stops winding-up petitions
Catch: Requires 75% creditor approval. We use pre-pack CVAs to pass this.
4. The Penalty Killer: Suspension Requests
HMRC penalties have 3 escape hatches:
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Reasonable excuse (mental health crises now qualify)
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Special reduction (if penalties exceed tax owed)
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Suspended penalties (for future compliance)
Template Email That Works:
*”I request penalty suspension under Para 14, Sch 56 FA 2009. For the next 6 months, I will:
File all returns 14 days early
Use MTD-compliant software
Attend HMRC webinars
Please confirm if this qualifies for suspension.”*
Stats: 61% of suspended penalty applications succeed vs. 9% of appeals.
5. When to Bring in a Tax Advisor
DIY works for debts under £10K, but if:
✔ HMRC is threatening enforcement action
✔ You have multiple tax debts
✔ There’s potential criminal allegations
…you need specialist representation.
Why Our Firm Wins These Cases
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Direct HMRC negotiation hotline (skips 2-hour queues)
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Penalty cancellation success rate: 89%
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Fixed-fee packages from £500