If you owe money to Her Majesty’s Revenue and Customs (HMRC) for unpaid tax it’s important to act quickly.

HMRC debt is considered to be a priority debt and failure to address the problem could lead to a visit from the bailiffs or court action.

Can I get HMRC debt written off?

Yes. It is possible to get HMRC debt written off with a debt solution, such as an IVA, that your creditor agrees to.

What is HMRC debt?

HMRC debt, also known as text debt, is money owed to Her Majesty’s Revenue and Customs for a range of different taxes. These include:

  • Value-added tax (VAT)
  • National insurance
  • income tax debt
  • other tax debts.

Tax debt is a priority debt so if you owe any HMRC debts it’s vital that you deal with them as soon as possible.

By not paying your tax bill you could face serious consequences, including debt collection, court action and in some cases even imprisonment.

What happens if I don't pay tax debt?

As mentioned above, failure to manage or repay tax debt could lead to further action being taken against you.

The actions can be severe and can include HMRC starting bankruptcy proceedings against you if you owe more than £5,000.

Here we outline some of the steps HMRC can take to recoup tax debt.

Debt collection

If you owe tax debt HMRC will take debt collection action against you.

The organisation will employ the services of a bailiff, also known as an enforcement agent, to collect the debt on its behalf.

HM Revenue and Customs don’t been a court order to visit your business premises to take your stock and equipment up to the value of debt owed.

If you don’t have enough goods at your business premises to cover the money owed the bailiffs can take goods from your home.

If you refuse entry to your business premises or home HMRC officials can get a warrant to gain entry.

Start bankruptcy proceedings

If you owe £5,000 or more in tax debt HMRC can begin bankruptcy proceedings against you.

Bankruptcy is a serious course of action to take and will lead to assets you own, including your home, being sold to settle your debt.

Your credit raring will be badly affected and you will not be able to hold a directorship during your bankruptcy.

Apply for a County Court Judgement (CCJ)

HMRC officials could also apply for a County Court judgment (CCJ) against you.

If this happens you’ll receive notification from the court along with paperwork that will request you offer a monthly payment plan you can afford.

A CCJ should always be taken seriously as failure to pay could result in HMRC applying for a charging order that could attach the debt to your home.

Summon a magistrates’ court hearing

If you owe £2,000 or less HMRC can issue a magistrates court summons.

Here you’ll be asked to share personal or financial information, including your business and household budget, to repay the money owed with a monthly payment plan.

If you fail to keep on top of the payments you’ll be called to a second hearing where you could face going to prison.

You may face imprisonment if found guilty of ‘wilful refusal’ (where you are able to make payments towards your tax debts but refuse on a point of principle), or ‘culpable neglect’ (where you can afford the payments but have ignored the tax bill).

Take money from your wage

HMRC can apply for an attachment of earnings to recoup tax debt owed from your wage if you work for an employer.

To do this HMRC officials will change your tax code to increase the amount of tax deducted from your wage.

You could face this action if you owe up to £3,000 and earn less than £30,000.

If you earn more than this, HMRC can collect larger debts through your tax code. This can be done up to a maximum of £17,000 if you earn more than £90,000 a year.

Take money from your savings

As well as the taking money from your wages, HMRC also has the ability to take money to pay tax debt from your savings.

To be able to take this action you must owe more than £1,000 and HMRC must leave at least £5,000 in your savings. That means if your savings are under £6,000 they can’t take this action.

It’s also important to be aware if you have joint savings and the tax debt is in your name, only half of the savings will be considered yours.


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What is Time to Pay?

When you owe money to HMRC it’s important to act quickly to avoid the most serious consequences. You should consider setting up a Time to Pay Arrangement before things escalate.

Put simply, Time to Pay allows you to set up a repayment plan with HMRC that allow you to repay your tax debt in instalments.

Payment plans will include details of your arrangement such as how many payments you’ll make and how much you’ll pay per instalment.

How can I avoid tax arrears?

It’s important to take steps to avoid tax arrears to avoid serious repercussions.

Check your tax bill

The first thing to do is check your tax bill from HMRC is correct. You should make sure that you’ve given them the correct information about your business finances. Failure to do this could result in you paying an over-estimated tax bill.

Set a budget

It’s important to know how much you’re able to afford to pay towards your income tax arrears. You should set your budget after you know how much your business takings are or estimate how much they’ll be.

Establish a pay arrangement

If you’re worried about making HMRC debt payments it’s important to reach out as soon as possible to set up a payment plan.

It’s important to never look like you’re avoiding paying tax debt so it’s best to pay something – even if only a small amount.

Stay in touch

If you’re worried about being able to pay your tax it’s important to contact HMRC as soon as possible. Tax debts such as VAT and income tax are priority debts and failure to pay could result in serious action being taken against you.

By not paying your tax bill you could face serious consequences, including debt collection, court action and in some cases even imprisonment.

Can I go to jail over tax debt?

If you don’t pay for your tax debt and make little or no effort to pay what you owe, you may face a prison sentence. Tax evasion can result in serious fines and could even result in jail time.

While this is rare it’s important to set up a pay arrangement with HMRC to avoid going to court.

Where can I get tax debt advice?

There are various charities that can help you manage debt owed to HMRC.

  • Business Debtline – Provides support for self-employed people facing debt management issues.
  • Citizens Advice – Offers support to people not only with business debt but also support with other debts.
  • TaxAid – Helps taxpayers on a low income who are struggling with what they owe HMRC.

Where can I find debt help?

While tax debt can’t be written off, support is available to help you manage what you owe.

Your Debt Expert specialises in providing support yo customers who struggle with a range of debts. Our experts can offer support if you’re worried about a range of debts. Contact us today for debt advice on 0800 082 8086.

Where can I get more advice on HMRC Debt and other debt solutions?

To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 082 8086 or click the button below to get started.