What happens if I don't pay my HMRC debts?
If you don't pay your HMRC debts including any tax credit overpayments,further action can be taken against you such as:
If you owe more than £5,000 HMRC can start bankruptcy proceedings against you. You can find more details about how this works on ourbankruptcy from creditorspage.
Send bailiffs to collect the debt
HMRC don't need to obtain a court order to visit your business premises and take your stock and equipment (up to the value of the debt that you owe them).
If you don't have enough stock or goods at your business premises to cover the debt, the bailiff (officially known as an enforcement agent) can go to your home and take goods from there. If you stop the HMRC officials from entering your business premises or home they can get warrant to break in.
Apply for a County Court judgment
They could get a County Court judgment (CCJ) against you.
If they apply for a CCJ you'll be sent some court forms. You need to fill these in and offer an affordable monthly repayment amount. Find out how to fill in these forms using our easy to followCCJ guide.
If you don't pay the CCJ they can use enforcement methods including applying for acharging orderto attach the debt to your property.
Issue a summons to a magistrates' court hearing
If you owe less than £2,000 HMRC can issue you with a summons to a hearing. You'll need to attend this with your business and household budget, to support an offer to pay by instalments.
If you don't keep to these instalments another hearing will be arranged to decide whether you should be sent to prison. Before this can happen you will need to be found guilty of ‘wilful refusal’ (when you have the ability to pay but refuse on a point of principle) or ‘culpable neglect’ (where you have the money but you've ignored the debt).
The court may decide not to send you to prison but it can't write off your debt.
Start bankruptcy proceedings against you
If you owe more than £5,000 HMRC can start bankruptcy proceedings against you. You can find more details about how this works on our bankruptcy from creditors page.
Take money from your wage
If you work for an employer, HMRC can collect a debt by altering your tax code to increase the amount of tax deducted from your wage.
HMRC can do this for debts of up to £3,000 if you earn less than £30,000. If you earn more than this, they can collect larger debts through your tax code, up to a maximum of £17,000 if you earn more than£90,000 a year.
Take money from your savings
HMRC can take money to pay tax and tax credit debts directly from savings held in banks and building society accounts.
This only applies to debts of more than £1,000 and they must leave a minimum of £5,000 in savings. So if your savings are under £6,000 they can't take this action.
If you have joint savings and the debt is in your name, only 50% of the savings will be classed as yours.
As an expert in financial regulations and governmental procedures, I bring a wealth of knowledge on the subject of tax-related matters and the consequences of not meeting financial obligations with entities such as Her Majesty's Revenue and Customs (HMRC). My expertise is grounded in a comprehensive understanding of legal frameworks, debt collection procedures, and the intricacies of financial governance.
In the article provided, the text outlines the repercussions individuals may face if they fail to pay their HMRC debts, including tax credit overpayments. Let's delve into each concept mentioned in the article:
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Bankruptcy Proceedings:
- If an individual owes more than £5,000, HMRC can initiate bankruptcy proceedings against them.
- This involves a legal process that may lead to the liquidation of assets to settle the debt.
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Bailiffs and Enforcement Agents:
- HMRC has the authority to send bailiffs (enforcement agents) to collect the debt.
- No court order is required for them to visit business premises and seize stock and equipment up to the value of the debt.
- If the business premises lack sufficient assets, bailiffs can go to the individual's home to collect goods.
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County Court Judgment (CCJ):
- HMRC can apply for a CCJ against the individual.
- The individual receives court forms and must fill them in, proposing an affordable monthly repayment amount.
- Failure to pay the CCJ may result in enforcement methods, including a charging order attaching the debt to the individual's property.
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Magistrates' Court Hearing:
- For debts less than £2,000, HMRC can issue a summons to a magistrates' court hearing.
- The individual must attend with a business and household budget to support an offer to pay by instalments.
- Failure to comply may lead to another hearing to determine potential imprisonment.
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Wage Garnishment:
- HMRC can collect debts by altering an individual's tax code, increasing the amount of tax deducted from their wage.
- This applies for debts up to £3,000 if the individual earns less than £30,000, and higher amounts for higher incomes, up to £17,000 for those earning over £90,000 annually.
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Savings Seizure:
- HMRC can take money directly from savings held in banks and building society accounts for debts exceeding £1,000.
- A minimum of £5,000 must be left in savings, and this action is not applicable if savings are under £6,000.
- In the case of joint savings with the debt in one person's name, only 50% of the savings will be considered as theirs.
Understanding these concepts is crucial for individuals to navigate their financial responsibilities and comprehend the potential consequences of non-compliance with HMRC obligations.
