During the COVID-19 pandemic, it has often seemed as through the world has become a topsy-turvy place to live in. For perhaps the first time ever, the taxman spent more time trying to give away money, rather than collect it. As a result, millions of people have benefited from initiatives like the Furlough Scheme and the Self-Employment Income Support Scheme. At the same time, HMRC debt collection has been very ‘light touch’ as it has given self-employed individuals and businesses more flexibility with regards to payment.
Unfortunately, this is now changing and HMRC debt collection has resumed in earnest. As a first step, it is contacting people who have fallen behind with their taxes.
How is HMRC contacting customers?
HMRC contacts taxpayers via phone, post, email or text message. However, it’s crucial that you confirm any communication is genuine. Sadly there are many scammers out there who pose as HMRC debt collection officials. HMRC offers help to identify whether a communication is real or fake – you can visit this page to find out more.
HMRC debt collection has contacted me. What do I do?
If you do get contacted by HMRC’s debt collection service, the best thing to do is to pay the tax you owe. However, given the tough time many of us have had over the last 18 months, the taxman is aware that many people are struggling.
If you are having difficulties paying your tax bill, the most important thing to do is talk to HMRC. While the taxman is resuming debt collection, HMRC is taking an understanding approach to people who are in difficulties. As HMRC guidance says:
“In all cases, we want to work with customers to find a way for them to pay off their tax debt as quickly as possible, and in an affordable way for them. Everyone is different, so the support we offer varies from customer to customer. For instance, we can discuss affordable payment options, such as a payment plan (called Time to Pay), where customers pay what they owe in affordable instalments. We typically have more than half a million arrangements in place at any one time, and more than nine out of ten of them complete successfully.”
In other words, if you are struggling, talk to HMRC as soon as possible. That way you can arrange a payment plan and reduce the impact of interest and penalties.
What happens if I don’t pay?
If you ignore HMRC’s communications, they may send someone to visit you at your home or business address. The first visit will be focused on making sure you are aware of the support available to you. It may also result in the agreement of a payment plan.
However, from September 2021, HMRC may use enforcement powers against people who don’t respond to communications about unpaid tax. According to HMRC:
“These powers include taking control of goods, summary warrants and court action including insolvency proceedings, but we only use them as a last resort and we take great care to use them fairly and carefully.”
I can’t cope with my debts. What do I do next?
If you are struggling with multiple debts, you may be able to apply for a ‘Breathing Space’. This is a new scheme that allows some people to apply for a break of up to 60 days, during which creditors can’t take enforcement action. The scheme is also open to people receiving mental health crisis treatment.
Can THP help with HMRC debt collection?
If you are worried about HMRC debt collection and you are a THP client, please do speak to your account manager as soon as possible. They will be able to help you decide on next steps.
About Karen Jones
Having worked for one of the world’s largest accountancy firms, Karen Jones uses her tax knowledge and skills to help clients obtain substantial reductions to their tax liabilities.
With an expanding portfolio of tax clients, Karen enjoys the variety her work brings her and particularly likes working with new businesses and people. With a growing number of tax clients, she frequently faces a variety of challenges and relishes the experience she gains as she solves them.
Karen likes the THP ethos: “I like the way the team has a professional, but friendly and down-to-earth approach – it creates a productive atmosphere that benefits everyone.”
Karen’s specialist skills:
- Personal Taxation
- Tax Efficient Planning
- Trust Administration