Are you a Director concerned HMRC tax debts?

If you are a Director of company, Oliver Elliot can help you understand and deal with what happens if HMRC Tax Bill is not paid.

Find out how

HMRC Tax Debts

If you do not pay your HMRC tax bill the quick answer is that it is not something that is going to go away or that you can ignore. It will be something that HMRC will know about and they will pursue the matter.

Detailed Answers As To What Happens If You Do Not Pay Your HMRC Tax Bill

Overview If HMRC Tax Bill Is Not Paid

If you do not pay your tax bill on time and cannot make an alternative arrangement to pay, HM Revenue and Customs (HMRC) can take ‘enforcement action’ to recover any tax you owe.

You can usually avoid enforcement action by contacting HMRC as soon as you know you’ve missed a tax payment or cannot pay on time.

They may agree to let you pay what you owe in instalments, or give you more time to pay.

Otherwise, there are a number of enforcement actions HMRC can take to get the tax you owe. They can:

  • collect what you owe through your earnings or pension
  • ask debt collection agenciesto collect the money
  • take things you own and sell them (if you live in England, Wales or Northern Ireland)
  • take money directly from your bank account or building society (if you live in England, Wales or Northern Ireland)
  • take you to court
  • make you bankrupt
  • close down your business

If you do not pay your tax on time, you’ll probably have to pay interest on the outstanding amount. You may also have to pay a penalty or surcharge.

Collection Through Your Earnings Or Pension If HMRC Tax Bill Is Not Paid

HM Revenue and Customs (HMRC) can make deductions from your salary or pension for debts for:

  • Self Assessment tax
  • Class 2 National Insurance

They’ll change your tax code to do this.

If you’ve been paid too much in tax credits, HMRC can also take back the money in this way, or by making deductions from your Universal Credit payments.

How much

HMRC can take up to £3,000 each tax year if you earn less than £30,000.

If you earn more than this, HMRC can take higher amounts depending on your salary. They can take up to £17,000 each tax year if you earn £90,000 or more.

When you’ll start repaying the debt

HMRC will write to you before making changes to your tax code.

They can change your code immediately, which means you’ll receive less money the next time you’re paid or get income from a pension.

If you’ve not repaid the debt by the end of the tax year, HMRC can continue to collect what you owe through next year’s tax code.

If you do not want debt included in your tax code

You’ll need to either:

  • pay the full amount you owe
  • contact us to help you negotiate an HMRC time to pay plan

Debt Collection Agencies If HMRC Tax Bill Is Not Paid

HM Revenue and Customs (HMRC) can collect your debt through a private debt collection agency.

The agency will write to you and you should pay them directly.

Debt collection agencies used by HMRC are:

  • 1st Locate (trading as LCS)
  • Advantis Credit Ltd
  • Bluestone Consumer Finance Limited (trading as Bluestone Credit Management)
  • BPO Collections Ltd
  • CCS Collect (also known as Commercial Collection Services Ltd)
  • Moorcroft
  • Oriel Collections Limited
  • Past Due Credit Solutions (PDCS)

Taking Control Of Foods (Distraint)

If you live in England, Wales or Northern Ireland, HM Revenue and Customs (HMRC) can take things you own, and sell them to pay your debt.

This is called ‘taking control of goods’ (or ‘distraint’ in Northern Ireland). You’ll also be charged certain fees.

What happens when HMRC visits

An officer from HMRC will visit you and ask you to pay your debt.

If you do not pay, the officer will make a list of your possessions that could be sold to cover both your debt and the costs of selling them, for example fees for auctioneers or advertising.

These possessions can then be either:

  • taken immediately by the officer
  • left with you under a ‘Controlled Goods Agreement’ (‘Walking Possession’ in Northern Ireland)

They can be sold if you do not pay within 7 days of the visit. If they sell for more than you owe, you’ll be paid anything over. If they sell for less, you’ll have to pay the difference.

From Your Bank Or Building Society Account

If you live in England, Wales or Northern Ireland, HM Revenue and Customs (HMRC) can take the money you owe directly from your bank or building society account. This is called ‘direct recovery of debts’.

HMRC will only do this if you:

  • have repeatedly refused to pay what you owe
  • have received a face-to-face visit from them to discuss your debt
  • would have at least £5,000 in your account after they’ve taken the debt

If HMRC plans to take money from your account

HMRC will write to tell you:

  • what they plan to do
  • what the process will involve
  • how to contact them with any queries

Court Action If HMRC Tax Bill Is Not Paid

If HM Revenue and Customs (HMRC) takes you to court, you may have to pay court fees and HMRC’s costs as well as the tax you owe.

Magistrates court (England, Wales and Northern Ireland)

HMRC can start magistrates court proceedings against you if:

  • you have separate debts of £2,000 each or less
  • you’ve owed the money for under a year

You’ll get a summons before the hearing explaining what you owe and where and when the hearing will be. If you pay, you will not have to go to court.

If you disagree with the amount on the summons, you’ll need to contact HMRC before your case goes to court.

If you do not pay, HMRC can ask the court to:

County court (England and Wales)

The court will write to you explaining how much you owe and what you need to do.

If you disagree with the amount you’re being asked to pay, you may need to go to court to explain why.

If you do not pay, HMRC can ask the court to:

  • send bailiffs to take and sell things that you own to cover the debt
  • take the money directly from your earnings
  • make you bankrupt or close down your company
  • order someone who owes you money to pay your debt
  • place a charge on your property

Sheriff court (Scotland)

HMRC will apply to the court for a warrant to collect your debt. You’ll have 14 days to pay from the date of the warrant.

If you do not pay, HMRC can ask the court to:

  • take the money you owe directly from your pay or from your bank account
  • take and sell certain goods from your business premises or your property
  • make you bankrupt or close down your company

What Next? Expert Advice Is Just A Click Away

If you have any questions in relation to If HMRC Tax Bill Is Not Paid What Happens? then Contact Us as soon as possible for advice. Our expertise is at your fingertips.

Disclaimer

This page: If HMRC Tax Bill Is Not Paid What Happens? is not legal advice and should not be relied upon as such. This article If HMRC Tax Bill Is Not Paid What Happens? is provided for information purposes only. You can Contact Us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.

Attribution Statement:

This page: If HMRC Tax Bill Is Not Paid What Happens? contains public sector information licensed under the Open Government Licence v3.0.