What Happens if you don’t Pay HMRC debt?

If you have an outstanding tax debt with HMRC, they will try to contact you to talk about your situation and agree an efficient and affordable way forward with you. If you do not respond, HMRC may believe you are refusing to pay and visit your address to get a better understanding of the situation and potentially take part or full payment. You cannot make the payment from a personal credit card.

It is important that you respond to and engage with them as it gives HMRC a chance to work with you and allow you to have a suitable co-created solution agreed.

If you cannot pay your tax bill from HMRC, you may have options. Some of these options can be:

• A flexible time to pay arrangement (by assessing your income and expenses)
• Using overpaid tax to contribute towards the debt rather than refunding it
• Changing your tax code and deductions.

If you disagree with a tax bill you have received, you should also get in touch with HMRC to allow them to investigate and rectify any mistakes.

The consequences to not paying and not engaging with HMRC to plan to pay, include bringing in debt collection agencies to settle[1], removal and sale of your assets (with the use of a locksmith to enter the property if necessary), take control of your goods on the basis and until you pay[2], direct recovery of debt from your personal bank accounts[3], and issue court proceedings – all with fees incurred by you added to the debt.

If you are a business, the situation is similar in that HMRC will ask you what you feel the business can afford to pay and may then work with you to create a payment plan based on the business finances and total debt.

It is always best to contact HMRC if you have any debt or are struggling to pay. If you require legal advice regarding debt, we here at Summerfield Browne can help you. Get in touch and let us know what your situation is.

[1] Should this happen, there are a set list of agencies they use: https://www.gov.uk/guidance/what-will-happen-if-you-do-not-pay-your-tax-bill#hmrc-and-debt-collection-agencies

[2] There are strict guidelines on what can be taken: https://www.legislation.gov.uk/uksi/2013/1894/regulation/4/made

[3] https://www.gov.uk/government/publications/issue-briefing-direct-recovery-of-debts--2