HM Revenue and Customs (HMRC) has issued new guidance for anyone who pays taxes, with a strong warning for those who do not pay on time, and supports those who struggle to meet payment deadlines.
If you cannot pay the tax owed in full and on time, HMRC can work with you to find a way to pay your taxes owed as quickly as possible and in a way that is affordable to you.
If you have a tax debt, HMRC will always try to contact you to speak about your situation and arrange a way forward before taking action, but they warn that ignoring communications could have serious repercussions.
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HMRC Guide to GOV.UK warns, “You should respond as soon as possible so we know you need assistance and don’t refuse to pay your debt.”
Options available if you cannot pay your tax bill
HMRC can:
- ask you to agree on a payment plan based on your financial situation called a payment deadline agreement
- Use any overpaid taxes that would normally be returned to you to pay off other outstanding tax debts
- Customize your tax number to collect any outstanding tax debt when you receive PAYE income
- HMRC also said, “We can use our debt enforcement powers to collect outstanding taxes if you don’t talk to us about how you’re going to pay your debt.”
What if you don’t work with HMRC or you refuse to pay your debt?
If you don’t respond when HMRC tries to contact you, they will visit your home or business address to work with you to pay the tax you owe.
They say this helps them understand your personal circumstances – for example, when you need additional support.
What happens during the HMRC visit?
HMRC will:
- inquire about your financial situation and solvency
- Try to come to an agreement with you on the best way to pay off the debt. This can be a full payment or an installment payment
But don’t panic.
HMRC assures customers that an agreement is usually reached in four out of five cases. However, if no agreement can be reached, they can “enforce the debt”.
Financial aid available in Scotland
What are HMRC’s enforcement powers and when to use them
HMRC advises that they only use debt enforcement as a last resort when customers fail to respond to communications and that these may be different for each country in the UK.
It said: “We will decide which powers are appropriate based on your circumstances.”
Take your belongings to pay off the debt
HMRC makes it clear that they will always warn you and allow you to pay off your debts before removing your possessions.
In Scotland, HMRC can use a collective redemption order. This is a type of court injunction issued for debt.
When a collective arrest warrant is issued, HMRC directs a court-appointed officer, a sheriff officer, to collect a fee for payment if you owe tax.
You then have 14 days to either:
- pay off your outstanding debt
- agree on a payment schedule to pay the tax owed in installments
If you do not agree with the amount of the debt, you need to contact HMRC ASAP to explain why you think the amount is incorrect.
If you have not paid the debt after 14 days, HMRC may instruct the sheriff officer to take whatever “due diligence” it believes is most appropriate.
You can use any or all of the following “due diligence” measures to avoid bankruptcy:
- Debt collection from a bank account – bank arrest
- Collection of debts through your income – Arresting Arresting
- Seizure and Sale of Your Property – Appendix
- Getting money back from a cash register in a store – investment
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How to get help and support
If you are having trouble paying your taxes, you should contact HMRC as soon as possible.
If you are struggling to pay HMRC and other creditors, free independent debt advice can be found on the MoneyHelper website here and Citizens Advice Scotland here.
You can also appoint a professional tax advisor, friend or family member to handle your HMRC tax affairs on your behalf – learn more here.
Here’s how to contact HMRC if you’re having trouble paying your taxes on GOV.UK’s website.
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