If you or your business are in debt to HMRC you must deal with these debts immediately. Whether it is PAYE, Corporation Tax, National Insurance or VAT, these very much fall into the “priority debt” category. HMRC are different from banks and other traditional lenders in that they do not work for a profit. This makes them a notoriously difficult creditor to deal with. However, as with all debts, there are solutions available to you.

How Does HMRC Recover Money?
  1. Direct recovery of debts – takes the money you owe directly from your bank or building society account,
  2. Distraint – sends the bailiffs round to take things you own and sell them to pay your debt. This is known as ‘distraint’ in Northern Ireland,
  3. Court action – takes you to Court, you may have to pay Court fees and HMRC’s costs as well as the tax you owe
  4. Bankruptcy proceedings – where you could lose your home, business, savings and investments
What Should you do if you Need Help With HMRC Debts?
  1. Don’t ignore it

As with most debt issues, the best form of defence is communication. If you’re transparent and responsive and explain your situation, HMRC is more likely to be reasonable in its approach and work with you to repay your debt. If you ignore them completely, your situation will worse. HMRC can also become aggressive quite quickly when ignored. Unlike some liabilities, HMRC debts do not go away with time.

  1. Check what you owe

The amount owed is based on HMRC’s calculations. Sometimes these can be incorrect, so check company accounts and tax returns to make sure HMRC are asking you to pay the correct amount.

This is unlikely to write off the amount owed but may reduce your overall debt and make it easier to pay off.

  1. Get the right advice

HMRC can be a difficult creditor to negotiate with. Further to this, HMRC debts are often combined with other liabilities which can make the situation even more complicated.

It is important that you get the best advice before you act. As with all debt issues, you need to consider your entire situation before making hasty and potentially wrong decisions with them.

Can we reach a settlement?

The simple answer is rarely. Whilst HMRC can be receptive and assist in terms of payment programmes etc, they do not and will not waste time with what they sometimes refer to as ‘serial offenders’.

Ultimately, HMRC can be open to payment agreements and other options e.g. IVAs. However, do not expect your debt to be largely written off. HMRC are not motivated by money; this makes them less receptive to negotiations, even when it seems to make commercial sense.

Bell & Company have over a decade’s experience negotiating with HMRC for both individuals and businesses. Contact us today to speak to an advisor and find out your options today. You can call us on 0330 159 5820 or use the Live Chat below to speak to one of the team.

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