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HMRC tax debt collection resumes and they may use enforcement powers from September 2021

During the coronavirus crisis, HMRC tax debt collection was paused as businesses grappled with the disruption cause by the pandemic.

However, on 30 June 2021, HMRC published a policy paper to note that it is restarting its debt collection work, as economic activity resumes following the progressive reopening of the UK.

As a first step of the HMRC tax debt collection, they will be contacting all taxpayers with outstanding debts to discuss payment options. Taxpayers must ensure they respond to these communications as soon as possible.

HMRC will aim to arrange for payment as quickly as possible. According to the policy paper though, where taxpayers still cannot afford to settle their outstanding tax debts HMRC aim to agree affordable payment options, such as a ‘Time to Pay’ (TTP) arrangement where tax can be paid in agreed instalments.

Alternatively, HMRC note that they may be able to offer a short-term deferral and are willing to discuss other forms of support, including government-backed loans and repayment holidays.


Get expert advice

We are recommending that before businesses agree payment plans with major creditors including HMRC that they take professional advice from their Accountants or from a Licensed Insolvency Practitioner.  Many businesses don’t just have outstanding taxes to overcome but also trade creditors and repayments starting on their bounce back loans or CBILs loans.  Many businesses are negotiating with HMRC for the very first time and need to appreciate that HMRC don’t normally entertain renegotiations once terms have been agreed and they also insist that all future taxes are paid on time and tax returns are submitted on time.  So it is highly important that businesses have a firm understanding what they can afford prior to starting discussions with HMRC.


Don’t ignore HMRC or you might get an unwanted visit!

From September 2021, where taxpayers are unwilling to discuss a payment plan, or where a taxpayer ignores communications from HMRC, they should expect a visit from HMRC at their registered office or business address to discuss settlement of the debt.  We have already seen a few clients receive a visit from HMRC in recent weeks and the purpose of the visit was to agree a TTP agreement rather than formal enforcement action.  This caught the clients unprepared, and they have probably agreed future payment terms that they are unable to afford.

In addition, HMRC may start the process of collecting the debt using enforcement powers (including seizure of goods, summary warrants and insolvency proceedings).

The government promises to use its enforcement powers “fairly and carefully”, but this announcement will concern many businesses which are still struggling as a result of 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’.

It is imperative that taxpayers co-operate with HMRC as soon as they are contacted. Taxpayers requiring additional time to pay need to be proactive and armed with detailed TTP applications, including realistic and achievable payment plans.


About Cowgills 

Cowgills is a leading independent firm of Chartered Accountants and Business Advisors based in the North West of England – from Greater Manchester to Liverpool. We use our sector experience to deliver tailored financial solutions and support for businesses.

Get in touch with our Head Office in Bolton, Greater Manchester, if you need our help with HMRC tax debt collection on 01204 414 243.

HMRC tax debt collection

The information was correct at time of publishing but may now be out of date.

Business Recovery
Posted by Cowgills
20th July, 2021
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