A new tax bill does not automatically rule out help from HMRC because your company already has a Time to Pay arrangement. HMRC says that if you cannot pay another tax bill, you should contact it; you may be able to include the new bill in your payment plan. That is an assessment of what the company can afford, not a right to add every liability or a guarantee of a second agreement. HMRC: how much you pay under a payment plan.
What matters is the existing plan, the new amount, what the company can pay now and whether a revised schedule is credible. HMRC will assess the company rather than apply a universal rule that a second liability cannot be discussed.
Record the tax type, accounting period, amount, reference and deadline for the new liability. A VAT bill and a Corporation Tax bill have different schedules and may belong to different HMRC accounts. Check whether the new amount comes from a filed return, an assessment or a forecast. If a return is due, arrange to file it accurately even if payment is uncertain.
Put the current Time to Pay terms alongside the new bill: remaining balance, monthly payment, next collection date and any overdue instalment. If the company has missed a payment or expects to, contact HMRC promptly. HMRC says it may discuss rearranging a plan if circumstances change; silence makes it harder to work out a practical route.
Build one company cash forecast, not two isolated promises
An existing payment plan already uses part of the company’s future cash. The question is whether a new amount can be paid without breaking that promise or leaving the next operating month unfunded. Build a short forecast covering:
- cash in the bank and any amount that can be paid immediately;
- customer receipts with realistic dates and known collection risks;
- wages, rent, suppliers and necessary trading costs;
- current HMRC instalments and other loan repayments;
- the new tax deadline and likely bills in the next one or two quarters.
HMRC asks a company about income, spending, other taxes and what it can repay each month. It may expect the company to reduce the debt as much as it reasonably can before a plan is agreed. Use the figures to form a proposal that can survive a delayed customer payment, rather than selecting a monthly instalment simply because it sounds attractive. HMRC: information needed for a payment plan.
An illustrative VAT and Corporation Tax scenario
Suppose a limited company pays £1,200 a month under a VAT Time to Pay arrangement. A Corporation Tax bill of £12,000 is due in six weeks. The directors expect monthly cash available after essential operating payments of £3,000, but one £8,000 customer invoice is uncertain. This is a hypothetical planning example, not a statement about what HMRC will accept.
The £3,000 is not all available for the new bill: £1,200 is already committed to the VAT plan, leaving an illustrative £1,800 before allowing for any other tax and cash reserve. If the customer pays late, even that £1,800 may be optimistic. Directors should model both receipt dates and decide what can be paid immediately, what monthly total remains affordable and what happens if the invoice is delayed. Bring that forecast to HMRC rather than asking for a second plan in isolation.
Contact HMRC before the new deadline if possible
Tell HMRC that an arrangement is running, identify the new liability and give the company’s reference numbers. Explain the reason for the new shortfall and what has changed in the forecast. Ask whether the new bill can be included in a revised plan, how existing payments would change and what interest or other charges will continue. Record the terms in writing or in the online account.
If an online service will not allow a new arrangement, use HMRC’s official payment-support contact route. Online eligibility and an adviser-led review are not always the same decision. Do not cancel or reduce an existing Direct Debit without an agreed change. If the current plan becomes unaffordable, tell HMRC before a payment is missed.
Compare funding only against an affordable plan
A company with a temporary timing gap may compare HMRC’s response with a tax loan. VAT Loans arranges VAT and Corporation Tax funding for UK limited companies. A lender might pay the tax amount while the company repays over agreed dates, but acceptance, term and cost depend on the application.
Compare the total repayments, all fees, timing of the first payment, any guarantee or security, and the company’s cash requirements when the next tax bill arrives. A borrowing decision that solves one due date but makes the next quarter unaffordable is not a durable solution. The existing Time to Pay comparison explains the routes in more detail.
There are other practical levers: follow up overdue customer invoices, check whether a VAT return is correct, review non-essential expenditure and seek terms with suppliers where appropriate. They should be measured in the forecast, not assumed to produce cash overnight. If the company cannot cover essential obligations under any realistic scenario, address the wider financial position directly rather than adding another short-term commitment.
Questions to prepare for the HMRC discussion
| Ask | Why it matters |
|---|---|
| Can the new liability be included in or alongside the existing plan? | HMRC says a new bill may be included, but will assess the company. |
| What amount should be paid immediately? | A part payment can reduce the debt and the balance on which interest is charged. |
| What are the revised collection dates and total monthly amount? | The existing Direct Debit and next tax bill must fit in one forecast. |
| What happens if a forecast receipt slips? | You need to know when to contact HMRC again, before a missed instalment. |
| Which charges continue? | Interest and tax-specific penalties differ; compare them with any finance offer. |
Common questions
Can a company have more than one Time to Pay arrangement?
HMRC’s current guidance does not establish a universal one-arrangement limit. It says to contact HMRC about a new bill and that it may be possible to include it in a plan. HMRC will assess the company’s circumstances and affordability.
Does the new bill automatically change the existing Direct Debit?
No. Use the agreed terms until HMRC confirms a change. Speak to HMRC promptly if the existing payment is at risk.
Will a VAT loan affect the HMRC plan?
Borrowing changes the company’s cash commitments. Explain all existing and proposed repayments when comparing options. Whether HMRC amends its plan and whether a lender accepts an application are separate decisions.
Next step: put the two liabilities and the next quarter’s forecast on one page. Contact HMRC with that picture, then compare any VAT loan estimate or Corporation Tax funding offer against the complete schedule.