Time to Pay vs CVA comes down to scale and formality: Time to Pay is an informal instalment plan with HMRC for tax arrears alone, while a Company Voluntary Arrangement (CVA) is a formal, court-recognised procedure under the Insolvency Act 1986 that can restructure debts owed to HMRC and other creditors together. Which one fits depends on how much you owe, how many creditors are involved, and how sustainable your cash flow is.
Directors often start by asking HMRC for breathing space, then discover the arrears have grown beyond what an informal plan can realistically clear. This article compares both routes so you can see where each one applies before deciding what to explore next.
Time to Pay and CVA in a nutshell
A Time to Pay (TTP) arrangement is an informal agreement between a company and HMRC to pay tax debts — VAT, PAYE, corporation tax — in instalments rather than in one lump sum. It is negotiated directly with HMRC, usually over 6 to 12 months, and does not involve the courts or other creditors.
A Company Voluntary Arrangement is a formal insolvency procedure. A licensed insolvency practitioner proposes a structured repayment plan, typically over three to five years, covering HMRC and other unsecured creditors. Creditors vote on the proposal, and once approved it binds everyone included, even those who voted against it.
If your arrears are limited to HMRC and manageable within a year, TTP is usually the first step. If debts are wider, larger, or a TTP has already failed, a CVA becomes the more realistic option. For a broader look at what's available before either route, see Owe HMRC and Can't Pay? Your Options.
How each handles HMRC arrears
Under Time to Pay, HMRC remains the only party involved. You agree a monthly amount, keep filing and paying new liabilities on time, and the arrangement can be cancelled if you miss a payment or fall behind on current tax. There's no formal document, no vote, and no court involvement — just an agreement with HMRC's Debt Management team. A fuller breakdown of how this works is covered in HMRC Time to Pay Arrangements Explained.
Under a CVA, HMRC is treated as one creditor among many, though usually the largest. The insolvency practitioner drafts a proposal setting out what creditors will receive and over what period, then HMRC's Voluntary Arrangements Service reviews and votes on it alongside other creditors. HMRC arrears sit inside the arrangement rather than being paid separately. For the mechanics of proposing and running one, see What Is a Company Voluntary Arrangement (CVA)?.
Cost, duration and formality compared
The two routes differ sharply in cost, length and formality:
- Time to Pay: no direct cost to arrange, negotiated informally with HMRC, usually lasts 6 to 12 months, and carries no public record.
- CVA: involves insolvency practitioner fees (built into the arrangement), requires formal creditor approval, typically runs three to five years, and is recorded at Companies House.
TTP is quicker to set up but offers less protection — HMRC can still pursue enforcement if terms are broken. A CVA takes longer to arrange and is publicly visible, but once approved it legally binds all included creditors, including HMRC, to the agreed terms.
Which debts and situations suit each
Time to Pay tends to suit companies where:
- Arrears are owed to HMRC only, not spread across trade creditors, landlords or lenders.
- The shortfall is temporary — a cash flow gap rather than a structural problem.
- The business can comfortably meet ongoing tax liabilities alongside the instalments.
A CVA tends to suit companies where:
- Debts are owed to multiple creditors, not just HMRC.
- Arrears have grown too large for a short-term instalment plan to clear.
- The underlying business is viable but needs several years to trade out of debt.
- A previous Time to Pay arrangement has broken down.
Where arrears keep growing despite an existing plan, it's worth understanding when informal options stop being enough — see When HMRC Arrears Mean Insolvency.
How HMRC votes and engages with a CVA
HMRC is often the largest single creditor in a company CVA, particularly where VAT and PAYE arrears have built up. Because of this, HMRC's support can be decisive: a CVA proposal needs at least 75% of creditor votes (by value) to be approved.
HMRC assesses proposals against internal guidance, looking at whether the company has a realistic plan, whether directors are being straightforward about the figures, and whether the return offered is better than what creditors would get in a liquidation. HMRC will generally reject proposals that look overly optimistic or that repeat a pattern of missed informal arrangements.
How to decide and who can advise
Start by asking three questions: how many creditors are involved, how large the arrears are relative to monthly cash flow, and whether a previous informal plan has already failed. Debts confined to HMRC and manageable within a year point towards Time to Pay. Wider, larger or repeat arrears point towards a formal arrangement like a CVA.
Because a CVA is a formal insolvency procedure, it must be proposed by a licensed insolvency practitioner — a director cannot draft or run one alone. HMRC negotiations for Time to Pay can be handled directly, though many directors still take advice before approaching HMRC, particularly if arrears are significant.
Frequently asked questions
Can I move from a Time to Pay arrangement into a CVA?
Yes. It's common for a company to start with Time to Pay and later move to a CVA if arrears grow, other creditors join the picture, or the informal plan breaks down. The two aren't mutually exclusive over time — TTP is often the first step, not the only one.
Does a CVA affect my company's credit rating?
A CVA is a formal insolvency procedure and is recorded publicly, which can affect how suppliers, lenders and credit agencies view the company during and after the arrangement. Time to Pay, being informal and private, does not carry the same public record.
Is my company eligible for a CVA?
A CVA generally suits companies that are insolvent or heading that way but still have a viable underlying business capable of generating enough cash to fund the proposal. A licensed insolvency practitioner assesses eligibility and feasibility before a proposal is drafted.
Will HMRC always agree to Time to Pay?
No. HMRC assesses each request individually and can refuse or cancel a Time to Pay arrangement, particularly where a company has a history of missed payments or where the proposed instalments look unrealistic given the company's finances.
What happens if a CVA proposal is rejected?
If creditors, including HMRC, vote against a CVA proposal, the company typically needs to consider other formal insolvency options, such as administration or liquidation, depending on its circumstances.
This article is general information, not legal, financial or insolvency advice, and every company's situation is different. If you'd like to talk through Time to Pay or a CVA for your circumstances, Harbourfirst can introduce you to a regulated insolvency specialist — start an enquiry.