Tax debts and time to pay

Surprisingly, this topic was completely omitted from the 2022 Autumn Statement - despite its emphasis on raising money to pay down government debt and fund public services. There are no extra resources for HMRC’s debt management teams, unless HMRC revises how it allocates its budget internally.

Figures released recently show that, as at 30 September 2022, HMRC was owed almost £47 billion, compared with £19 billion at 31 March 2020. The good news in these statistics is that the managed debt (including time to pay) increased from £4.6 billion to £9.1 billion over the period from 31 March 2022 to 30 September 2022, although the number of taxpayers in time to pay arrangements fell from 888,508 to 822,715 over the same period.

Collecting this debt would help HM Treasury’s cash flow, so HMRC’s Debt Management teams will be under some pressure to bring in the cash. HMRC’s powers in this area have expanded over recent years. It can recover some debts directly from bank accounts, ask for security for tax debts, use bailiffs and, in some cases, seek to transfer a company’s liabilities to its directors.

On the spot payments

Now HMRC has announced that its officers will take card readers with them when they visit taxpayers’ premises to pursue tax debts. HMRC will no doubt hope that this will encourage taxpayers to pay straight away, at least for some of the debt. Taxpayers experiencing these visits should take care to ensure the person is legitimate by contacting HMRC to confirm the person’s identity. Sometimes HMRC’s debt system says money is payable when it is under appeal or has been paid, so taxpayers should also ensure the debt is correct before paying HMRC.

Paying tax late can be costly as HMRC may charge interest and penalties. For those who know they cannot afford to pay all their tax on time, HMRC offers time to pay arrangements so that payments may be made by instalments. For those who are experiencing serious financial difficulties, specialist advice should be sought from an insolvency practitioner or Citizens Advice so you can understand your options.

Need more time to pay?

For those who just need some more time to pay, HMRC is encouraging taxpayers to file their tax returns early so that they then have time to seek advice and obtain a time to pay arrangement (see our quick guide) before the payment deadline. Whilst some time to pay arrangements can be set up online directly with HMRC, others can only be arranged after providing information to HMRC’s debt management teams. We can advise you on what is possible and help you set up the payment arrangement.

Contact a member of our tax team if you need to talk to someone.

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