HMRC Time to Pay rejected: 7 to 14 day rescue runbook
By Oliver Mackman · Reviewed 2026-05-07
You applied for an HMRC Time to Pay arrangement and HMRC has rejected the proposal, or has agreed it then collapsed it after a missed payment. Enforcement is now days away rather than months.
What this is
A formal Time to Pay rejection by HMRC ends the negotiation route. Late-payment interest accrues at 7.75% from 9 January 2026 (Bank of England base rate plus 4 percentage points). HMRC typically writes giving 7 to 14 days before passing the file to a debt-collection agency or to the Field Force enforcement team. Distraint, third-party debt orders and winding-up action follow if the file moves.
What happens if you do nothing
Enforcement options sit on a tight clock. HMRC can instruct a debt-collection agency, take controlled goods (formerly distraint) under a Schedule 12 Taking Control of Goods order, freeze a bank account through a third-party debt order, or issue a 21-day statutory demand that leads to a winding-up petition. Each step closes off the cheaper recovery routes. Commercial lenders price for active HMRC enforcement; a few will not engage at all once a winding-up petition is on file.
Options, in order
- Reapply within 7 days with a stronger proposal: shorter total term, larger upfront payment, and management accounts that show how cashflow recovers. Most TTP rejections are about the credibility of the recovery story, not the absolute number.
- Pay the bill in full from a commercial term loan or working-capital facility. Funding Circle and iwoca will engage at quote stage on a soft search. Allica Bank fits if the ticket is £150k or above and you have an unencumbered asset.
- Use a VAT or PAYE clearance loan from a specialist lender via our broker panel. Decision typically inside 72 hours; useful when the bill itself is a single quarterly liability.
- Asset-backed bridging against owned commercial property if the timeline is too tight for a standard term loan. Acorn Commercial Finance and Shawbrook Bank work in this space.
- Speak to a licensed insolvency practitioner before the statutory-demand stage if commercial finance cannot be raised inside the window. Borrowing into insolvency creates director personal-liability risk.
Which UK lenders engage
- · iwoca for working-capital top-up at speed: same-day decision, soft search at quote.
- · Funding Circle for clean-credit £25k to £500k tickets where the company has 2+ years of trading.
- · Capify or 365 Business Finance for hospitality and retail with strong card-machine flow when credit-file weight needs to be reduced.
- · Just Cashflow for established Ltd companies needing a revolving facility to ride out the next 6 to 12 months.
- · Acorn Commercial Finance for asset-backed cases where commercial property is owned.
- · Bizcap or JPM Capital where mainstream lenders have already declined.
HMRC-specific notes
HMRC will reconsider TTP only if something material has changed: a stronger upfront, a shorter term, evidence the previous default cause is fixed, or a third-party endorsement (your accountant submitting alongside). The Business Payment Support Service line (0300 200 3835) is the right contact. Late-payment interest of 7.75% from 9 January 2026 stacks on top of any agreed instalment plan, so the cheapest commercial alternative is often competitive against TTP once the all-in cost is calculated.
Do not do this
- · Submit a second TTP application with the same numbers. HMRC reads it as a delay tactic and may accelerate enforcement rather than negotiate.
- · Pay any other creditor preferentially once HMRC enforcement is live. That can become a preference under section 239 Insolvency Act 1986 and create personal liability for the director.
- · Take a personal loan to clear a corporate tax bill. The corporate liability stays on the company; the personal debt creates a director-loan-account event with separate Corporation Tax implications under section 455.
- · Continue trading as normal once a statutory demand is in hand. The directors' duty shifts to creditors at the point insolvency is reasonably anticipated.
When to call an advisor before borrowing
Always when TTP has been rejected. A licensed insolvency practitioner should review the cashflow before you take new commercial debt. If the underlying business is not viable, borrowing turns an HMRC enforcement event into a personal-liability event for the director. Most IPs offer a free initial consultation.
Related
- · All HMRC pressure scenarios
- · Our post-decline routing (if mainstream lenders have declined)
- · After a decline: alternative lenders
Editorial only. We are not an FCA-authorised adviser or licensed insolvency practitioner. For active enforcement action, contact a licensed insolvency practitioner directly.