Collection of tax debts after COVID-19

During the COVID-19 pandemic, HMRC paused much of their debt collection work, both to divert resources to administering the various COVID-19 support schemes and to help taxpayers whose finances were adversely affected by the pandemic. However, as the country emerges from the Coronavirus crisis, HMRC have restarted their tax debt collection work and will be contacting taxpayers who have fallen behind with their payments.

Talk to HMRC

If you have unpaid tax debts and HMRC contact you to discuss those debts, the best course of action is to speak to them to agree a repayment plan. Ignoring the problem will not make it go away, and HMRC may start enforcement proceedings against taxpayers who ignore their attempts to contact them.

Pay if you can

If you have outstanding tax debts and are able to pay them, HMRC’s expectation is that you will. In assessing your ability to pay, HMRC will expect you to make use of the various COVID-19 finance schemes, such as the Recovery Loan Scheme, to raise the necessary funds. If you need time to arrange the finance, HMRC may offer a short-term deferral of your tax debt. If this is agreed, HMRC will not take any action until that period had elapsed, and you will not need to make any payments during the deferral period.

Time-to-pay arrangements

If you are unable to clear your outstanding tax debts in full, you may be able to agree a time-to-pay arrangement with HMRC.

There is no standard agreement; time-to-pay arrangements are based on an individual’s circumstances. HMRC will establish your ability to pay by looking at your income and expenditure. They will also want to know why you are struggling to pay, and what action you have taken to try and pay some or all of the bill.

Enforcement action

If you do not pay your outstanding tax debts or come to an agreement with HMRC to pay what you owe in instalments, from September 2021, HMRC may use their enforcement powers to collect tax that is owed to them. Avenues available to them include taking control of goods, summary warrants and court action, including insolvency proceedings.

While HMRC will, where possible, aim to support viable businesses, if a business has little chance of recovery, HMRC will take action to recover any tax that they are owed.

Talk to us

If you have tax debts that you are struggling to pay, speak to us. We can help you agree a repayment plan with HMRC.

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