HMRC Time to Pay proposal letter

A Time to Pay arrangement lets a company clear a tax bill in instalments when it cannot pay in full. You can propose one to HMRC directly, through the Payment Support Service or, for some taxes and amounts, online through your HMRC account, and you do not need to pay anyone to ask for it. HMRC decides whether to accept based on what you can afford, and gov.uk says it will ask how much you can repay each month, what you earn, what you spend and what savings you have. A Time to Pay arrangement is free to set up but not interest-free: HMRC charges late payment interest on the balance for the life of the plan. Use the letter below as a starting point and put in your own figures. gov.uk: If you cannot pay your tax bill on time

The letter

Copy or download the letter below and replace everything in square brackets with your own details and figures. Only propose a monthly amount you are confident the company can actually pay.

[Company name] Limited
[Registered office address]

HM Revenue and Customs
[Office address, or the address on your HMRC letter]

Date: [date]

Reference: [your UTR / VAT registration number / PAYE reference]

Dear Sir or Madam

Time to Pay proposal: [company name], [reference]

We are writing to propose a Time to Pay arrangement for the following
tax that the company is currently unable to pay in full:

  Tax:            [for example Corporation Tax / VAT / PAYE and NIC]
  Period:         [the period or accounting reference]
  Amount owed:    [amount]
  Due date:       [the date it was, or is, due]

Why the company cannot pay in full now
[Briefly and honestly explain the reason, for example: a large customer
paid late, a fall in orders, or a one-off cost. Keep it factual.]

What we propose
The company proposes to clear the arrears as follows:

  An immediate payment of:   [amount, if you can offer one]
  Then monthly payments of:  [amount] per month
  Starting on:               [date]
  For:                       [number] months, clearing the balance by [date]

The company will continue to pay all new and ongoing tax liabilities in
full and on time during the arrangement.

Affordability
To help you assess the proposal, our position is:
  Monthly income / turnover:        [figure]
  Regular monthly outgoings:        [figure]
  Cash and readily available funds: [figure]
  Other tax liabilities:            [list any, or "none"]

We understand that interest will continue to accrue on the outstanding
balance for the life of the arrangement, and we have taken that into
account in the figures above.

We would be grateful if you would confirm whether this proposal is
acceptable, or let us know what you would need in order to agree an
arrangement. The company is committed to clearing this liability.

Yours faithfully


......................................
[Name]
[Position, for example Director]
For and on behalf of [company name] Limited
[Contact telephone number and email]

Make the numbers realistic first

HMRC accepts arrangements it believes you can keep to, so the figures matter more than the wording. Work out a monthly amount that clears the arrears in a reasonable time while the company still pays its new tax on time. Our Time to Pay affordability calculator gives you a realistic monthly figure to propose, including the effect of interest.

Remember that interest keeps running on the outstanding balance for the whole arrangement, so the total you repay is a little more than the original bill. There is no arrangement fee, and you can deal with HMRC directly rather than through a paid intermediary. You can read more about the process on our HMRC debt and Time to Pay pages.

If HMRC says no, or you cannot afford any plan

If HMRC declines, or if the company cannot realistically afford instalments even after cutting back, that is a sign the underlying position may be more serious than a cash-flow gap. In that case the safer step is to take advice from a licensed insolvency practitioner about the company's options before the arrears grow or enforcement starts. This template is general information, not advice, and does not guarantee HMRC will agree.

Related: Time to Pay affordability calculator, company HMRC debt, Time to Pay arrangements, and the creditor holding letter.

This is general information, not legal or financial advice. A proposal letter does not guarantee HMRC will agree a Time to Pay arrangement, and interest continues to accrue on the balance. If the company cannot afford to clear its debts, speak to a Licensed Insolvency Practitioner. Last reviewed July 2026.