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.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:
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.
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.
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.
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.
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.
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).
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.
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.
It was literally the best decision of my life, and it has actually changed my life, cheesy as that sounds, it has changed my life.
Paige , IVA Customer
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.
It’s important to take steps to avoid tax arrears to avoid serious repercussions.
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.
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.
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.
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.
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.
There are various charities that can help you manage debt owed to HMRC.
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.
Advice and support is also available at Money Helper.
*A debt write off amount of between 25% and 75% is realistic, however, the debt write off amount for each customer differs depending on their individual financial circumstances and is subject to the approval of their creditors. The example provided has been achieved by 10% of our IVA customers in the last 12 months.
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This website is in no way approved by the Government. The product (IVA) we administer through the group and process with our Insolvency Practitioners is covered under the following legislation: The Insolvency Act of 1986 (amended by the Insolvency Act 2000 and the Enterprise Act 2002) introduced a new procedure whereby a debtor could come to an arrangement with their creditors to pay their debts in full or in part over time as an alternative to bankruptcy. Our advisors will go through all your debt options including IVA (Individual Voluntary Arrangement) opportunities which are available for people living in England, Wales and Northern Ireland. Help can only be offered following an initial fact-finding process. An Individual Voluntary Arrangement (‘IVA’) is subject to the customer meeting qualifying criteria and gaining creditor acceptance. Initial advice is free and there is no obligation to proceed into an arrangement. Arrangement fees will be clearly explained to you in writing by your advisor.