VAT registered businesses that owe less than £20,000 of VAT are now able to set up a ‘Time to Pay’ agreement.

A Time to Pay arrangement just means setting up a plan to pay VAT in instalments.

Payment plans are subject to HMRC’s prevailing interest rate, which is the base rate + 2.5%.

The VAT payment plan can be set up online, through the Government Gateway login.

Criteria for setting up a VAT payment plan online

To set up a time to pay agreement, a business must have

  • Filed its latest VAT return;
  • Owe £20,000 or less;
  • Be within 28 days of the payment deadline;
  • Have no other payment plans or debts with HMRC; and
  • Plan to pay off its debts within the next six months.

Businesses that are not eligible to set up a time to pay agreement are those that

  • Use the VAT cash accounting or annual accounting schemes; or
  • Make VAT payments on account.

HMRC has a specific page to assist with any issues in making payments or you can contact the Payment Support Service on 0300 200 3835. Alternatively, get in touch with your usual M+A Partners contact or email