Can I pay HMRC in instalments after an enquiry?

When an enquiry ends, HMRC issues a demand for the tax, interest and any penalty due, usually with a single payment date. If you can't pay that in one go, HMRC can agree to spread it through a Time to Pay arrangement.

This isn't automatic. You need to contact HMRC, explain what you can afford, and propose a realistic schedule of instalments. HMRC will look at your income, assets and other debts before agreeing terms, and larger or more complex enquiry debts are usually handled by a dedicated caseworker rather than the general helpline.

Interest continues to run on whatever remains outstanding throughout the arrangement, so spreading payments reduces immediate cash flow pressure but doesn't reduce the total amount you'll eventually pay.

There's no single piece of legislation setting out Time to Pay; it operates under HMRC's collection and management powers, exercised at its discretion based on published guidance. HMRC will generally expect you to have explored other funding options first, but that doesn't mean instalments are a last resort only for those in genuine hardship.

For enquiry debts specifically, HMRC's collection teams often coordinate with the compliance caseworker who handled the enquiry, since the debt frequently includes elements, like a disputed penalty, that may still be under appeal.

Interest continues under the statutory late payment interest rules regardless of whether an instalment plan is in place, because Time to Pay defers the payment date; it doesn't change when the liability arose.

If the liability sits with the company, HMRC will look at the company's cash position and trading prospects when assessing a proposal. If it's a personal liability, such as your own Self Assessment penalty, HMRC looks at your personal finances instead.

Where both company and personal liabilities arise from the same enquiry, for example Corporation Tax on the company and a related dividend adjustment on you personally, you may need to negotiate two separate arrangements, which is worth flagging early so the numbers are consistent.

Directors sometimes worry that asking for Time to Pay signals weakness or invites closer scrutiny. In practice, HMRC would generally rather agree a realistic plan than pursue enforcement action against a company that's otherwise viable.

Spreading payments doesn't reduce the tax, interest or penalty; it only changes when you pay it, with ongoing interest on the reducing balance. Compare that cost to any alternative, such as business finance, before deciding which route is cheaper overall.

Missing an agreed instalment can cancel the whole arrangement, at which point HMRC can pursue the full outstanding balance immediately, including through enforcement action such as taking control of goods or, in limited circumstances, direct recovery from a bank account.

Growth plan clients have free tax investigation insurance included, which helps with the professional costs of managing the enquiry itself, though it doesn't cover the tax, interest or penalty payments themselves — see /fees for what's included.

Don't wait until after the payment deadline has passed to contact HMRC. Reaching out before the due date puts you in a much stronger position and avoids default surcharges triggering unnecessarily.

Don't propose instalments you can't realistically maintain just to get an agreement in place. A broken arrangement is treated more seriously than an honest, sustainable proposal from the outset.

Don't assume a Time to Pay arrangement pauses interest. It doesn't, so factor ongoing interest into how much you'll actually repay over the life of the plan.