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Ways that HMRC can collect overdue tax

Source: HM Revenue & Customs | | 21/01/2020

If you are unable to pay your tax bill or need time to pay then it is in your best interest to contact HMRC as soon as possible. For example, you can apply to HMRC to make a payment plan and seek to agree a way forward. This can be done through the Payment Support Service (PSS).

If the payment of overdue tax is unresolved, HMRC can take enforcement action to secure the money they are owed. HMRC can also charge interest on outstanding amounts and you may also be required to pay penalties and surcharges. There are a number of ways that HMRC can collect overdue tax.

This includes:

  • collecting what you owe through your earnings or pension
  • asking debt collection agencies to collect the money
  • taking items that you own and selling them (if you live in England, Wales or Northern Ireland)
  • taking money directly from your bank account or building society (if you live in England, Wales or Northern Ireland)
  • taking you to court
  • making you bankrupt or closing down your business

There are limits on HMRC’s scope to take money owed. For example, the Direct Recovery of Debts rules allows HMRC to target non-compliant taxpayers who have sufficient funds in their accounts to pay. HMRC has said that these powers will only be used as a last resort after the debtor has repeatedly refused to pay what they owe and have received a face-to-face visit from HMRC to discuss their debt. There are also measures in place to ensure that a minimum of £5,000 is left in a taxpayer's account.


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