Tax debts

If you have tax debts, you should contact HM Revenue and Customs (HMRC) as soon as possible.

HMRC can take the following action to recover the debt:

  • TaxSend officers to your home to take away goods to sell and raise money. Although HMRC officers are not allowed to force their way into your home, they can apply to the magistrates’ court for a warrant which will allow them to break in. However, this is unusual.
  • If your arrears are £3,000 or under, you can be issued with a summons to a magistrates court hearing. The court will usually order you to pay the arrears and costs. If you pay before the hearing, no further action will be taken against you. If you disagree with the amount of the arrears, it is important you contact HMRC before the hearing because the magistrates cannot consider any dispute about the amount.
  • Issue a claim in the county court.
  • For sums of £5,000 and over, Issue a statutory demand if you’ve been in arrears for some time. This is the first stage of making you bankrupt. If you get a statutory demand, you’ll need legal advice as soon as possible.
  • If you admit you are liable for the tax, draw up an income and expenditure sheet to assess how much money you have left after covering your essentials.
  • Try and reach an agreement with HMRC to repay the arrears. Explain your circumstances, for example, if you are ill and this is the first time you are in arrears, you may get treated more sympathetically.
The Limitation Act whereby debts go statute barred after 6 years without payment or written acknowledgment does not apply to tax debts.
Tax debts can usually be included in formal insolvency solutions such as bankruptcy, debt relief orders and IVAs.

Getting help

  • You can get free advice and help with tax matters from an HMRC Enquiry Centre. You can find your local Enquiry centre on the HMRC website. You’ll need to make an appointment first.
  • If you’re on a low income, you may be able to get advice from TaxAid. You can contact the TaxAid helpline on 0845 120 3779. They produce a helpful booklet Called ‘Tax debt? Can’t afford to pay?’ which you can download from their website.
  • If you’re over 60, on a low income and have a tax query, you can phone the TaxHelp for Older People helpline on 0845 601 3321, or look on their website: www.taxvol.org.uk.
Always deal with priority debts first. If funds are limited, non-priority creditors can wait!
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