During the COVID-19 pandemic HMRC paused many of their debt collection activities however, on 30 June 2021, HMRC published a policy paper to note that these will be resuming as the UK emerges from the pandemic. HMRC’s key message is “if you can pay your taxes then you should do so – but if you’re struggling, we want to work with you to agree a plan based on your financial position.” As a first step HMRC will contact taxpayers who have outstanding tax debts to discuss payment. Taxpayers should ensure they respond to these communications as soon as possible. From September 2021, where taxpayers are unwilling to discuss a payment plan, or where a taxpayer ignores communications from HMRC, they may start the process of collecting the debt using enforcement powers.
According to the policy paper, for taxpayers who still cannot afford to settle their outstanding tax debts HMRC can agree affordable payment options, such as a ‘Time to Pay’ arrangement where tax can be paid in agreed instalments. Alternatively, HMRC note that they may be able to offer a short-term deferral. Taxpayers who can afford to fully settle their debt should do so as soon as possible.
Where taxpayers do not respond to HMRC’s phone, postal or text message communications, or they “refuse to pay when they can afford to”, HMRC may take the additional step of trying to visit them at their home or business address to discuss settlement of the debt. From September 2021, they may start the process of collecting the debt using their enforcement powers. These powers include taking control of goods, summary warrants and court action including insolvency proceedings.
It is therefore important that taxpayers co-operate with HMRC when they are first contacted. Taxpayers seeking additional time to pay need to be proactive and prepared with detailed time to pay applications, including realistic payment plans.
If you require assistance with this, please speak to your accountant or AKEPB to discuss your financial position.
