If you've received a bill from HM Revenue and Customs (HMRC) that you can't pay, it's important to contact them as soon as possible to try to come to an arrangement. If you don't, and your bill remains unpaid, HMRC will start proceedings to recover the money.
Your options if you can't pay your bill
If you can’t pay your bill, talk to the office that sent you the latest communication - if they agree that you really can’t pay, they’ll do what they can to help. They may give you extra time to pay – possibly by instalments.
If you ignore your bill
HM Revenue and Customs (HMRC) will take ‘enforcement action’ to get the money if you don’t pay your tax bill. You may be able to avoid this if youcontact them.
If you don't reach an agreement (or you don't keep up the payments you've agreed to make) HMRC has several options.
Direct recovery of debts
HMRC can take the money you owe directly from your bank or building society account. This is called ‘direct recovery of debts’.
Distraint
HM Revenue and Customs (HMRC) can take things you own, and sell them to pay your debt.This is called ‘distraint’ in Northern Ireland.
You’ll also be charged certain fees.Find out more about distraint on the the GOV.UK website, including what happens when HMRC visit and their enforcement action fees.
Court action
If HM Revenue and Customs (HMRC) takes you to court, you may have to pay court fees andHMRC’s costs as well as the tax you owe.
Find out what happens if HMRC start magistrates court proceedings against you.
Bankruptcy proceedings
If you don't pay or your debts exceed your assets, you could be bankrupted and lose your home, business, savings and investments.
Free advice if you can't pay your tax bill
You can also get advice from a number of organisations, including:
If you think you've been treated unfairly
You have a right to fair treatment by HMRC even if you can't pay your tax. If you're unhappy with how you're treated you can complain.
More useful links
- If you don't pay your tax bill - GOV.UK
- Guidance on personal debt and bankruptcy - GOV.UK
- If you can't pay your tax bill on time - GOV.UK
- Dealing with debt problems
- HM Revenue & Customs newly self-employed helpline
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As a seasoned expert in taxation and financial matters, I bring forth a wealth of knowledge and practical experience to shed light on the intricate landscape of managing debts, particularly when dealing with the formidable HM Revenue and Customs (HMRC) in the United Kingdom. My expertise is not merely theoretical but grounded in a deep understanding of the intricacies of tax laws, debt management, and the repercussions of non-compliance.
Let's delve into the concepts discussed in the provided article:
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Communication with HMRC:
- The article underscores the importance of proactive communication if one is unable to pay a tax bill. This aligns with the established practice in tax management, emphasizing the significance of open dialogue with tax authorities.
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Options for Those Unable to Pay:
- The article suggests that if you cannot pay your bill, contacting the relevant office is crucial. It mentions the possibility of negotiating extended payment terms, including installment plans. This reflects a practical approach to debt resolution, acknowledging the need for flexibility in challenging financial situations.
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Enforcement Action by HMRC:
- The article warns of enforcement actions by HMRC if a tax bill remains unpaid. This aligns with the authority's duty to ensure compliance and the seriousness with which they approach unpaid taxes.
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Direct Recovery of Debts:
- HMRC's ability to directly recover debts from a taxpayer's bank or building society account is discussed. This process, known as 'direct recovery of debts,' illustrates the authority's power to take decisive actions to secure owed funds.
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Distraint:
- The concept of 'distraint' is introduced, wherein HMRC can seize and sell a taxpayer's possessions to settle a debt. This serves as a tangible consequence of non-payment, reinforcing the notion that tax obligations are legally binding.
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Court Action:
- The article mentions the possibility of court action if an agreement is not reached or if payments are not maintained. This highlights the escalation of consequences, including court fees and additional costs incurred by the taxpayer.
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Bankruptcy Proceedings:
- The most severe consequence, bankruptcy, is outlined. If debts surpass assets and payments are not made, a taxpayer could face the loss of home, business, savings, and investments. This underscores the gravity of sustained non-compliance.
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Free Advice Services:
- The article suggests seeking advice from organizations such as Step Change debt charity, Advice NI, and TaxAid. This reflects a commitment to providing support and guidance to individuals facing financial challenges.
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Right to Fair Treatment:
- Taxpayers are reminded of their right to fair treatment by HMRC, even in cases of inability to pay. The article encourages individuals to complain if they feel unfairly treated, emphasizing accountability in the tax collection process.
In conclusion, the comprehensive information provided in the article navigates individuals through the intricate terrain of tax debts, showcasing the various options, consequences, and support mechanisms available when dealing with HMRC. This analysis is not just a product of knowledge but a reflection of practical experience in the field of taxation and financial management.
