- As the country emerges from the pandemic and the economy opens up, HMRC will resume its debt collection work by contacting individuals and businesses that have fallen behind on their tax payments. The clear message from HMRC is that those who can pay their taxes should do so, but a supportive approach will be taken where the taxpayer is in financial difficulty or otherwise concerned about their ability to pay their taxes.HMRC will contact those with tax debts either by phone, post or text message to discuss the situation and agree a way forward. It is important that anyone who is contacted responds as soon as possible so that HMRC can establish whether additional support is required or if the taxpayer is simply refusing to pay. There has been an increase in the number of scams during the pandemic and HMRC have issued guidance on how taxpayers can check whether the contact they receive is genuine.
The level of support HMRC can offer varies from taxpayer to taxpayer but typically could include:
- A ‘Time to Pay’ payment plan where affordable instalments can be agreed, more details on this can be found here
- A short-term deferral whereby nothing is paid for an agreed set period, with no additional action taken until that time has passed.
Where taxpayers fail to respond to communications, HMRC may visit home or business addresses with a view to agreeing an action plan for settling any liabilities. From September 2021, where a taxpayer ignores communications from HMRC or refuses to discuss a payment plan, HMRC will consider using its enforcement powers. These powers are used as a last resort e.g insolvency proceedings will only be considered where there is evidence of fraud, deliberate non-compliance or where liabilities continue to accumulate and there is no prospect of the taxpayer being able to settle existing debts.
Ultimately, HMRC will look to help taxpayers facing temporary financial setbacks as much as possible, so if a taxpayer is contacted by HMRC’s Debt Collection Unit it is important that they engage in dialogue and that the channels of communication remain open.
If you would like to discuss this feature further, please contact a member of our tax team to the right of this page.