Tax Debt & HM Revenue and Customs in the UK



The HM Revenue & Customs (HMRC) have stringent policies for dealing with those that are not paying their tax bills.

If you ever receive a bill from the HMRC, it must be given serious consideration. You should contact them promptly. Speak with a representative and let them advise you. Most likely, an arrangement can be made that will be beneficial to you both. If you choose to ignore the bill, the HMRC can start proceedings to recover the funds, which will only make the situation worse … for you.


HMRC stands for Her Majesty’s Revenue & Customs. This organisation is primarily responsible for the collection of taxes. The HMRC is our largest business with revenues of £436 billion annually. They have a staff of 66,000 employees serving 33 million citizens across the United Kingdom.

Besides collecting tax, the HMRC also administers benefit payments. This covers a vast field of work that helps keep Britain afloat financially. Not to state the obvious, but this is why paying one’s tax is pertinent. Without these funds, public programs, education, defense and so much more, would suffer.

They also protect national interests by inspecting travelers for contraband that shouldn’t be brought into the UK. They pay out tax credits. Through personal contact with thousands of individuals on a daily basis, the staff at HMRC works to help people with important work like tax filing, returns and benefit forms. Customer service is a critical part of their operation. It’s believed that everyone in the UK will have direct contact with HMRC at some point in their lives.

Dealing with individuals and businesses of all types, HMRC keeps a varied staff of experts in its employ, including designers, lawyers, and, of course, accountants.

Public Perception

Unless one’s getting a refund, no one wants to hear about the tax man. We tend to cringe at the thought of being in the same room with them.

It’s unfortunate as they are not monsters. They are individuals trying to do their jobs and a greater good. Without them, there would be no armed forces guarding our borders. No policemen walking our streets. No national parks or public beaches to spend a quiet, relaxing afternoon with our families.

They can be more than amenable. If you are having difficulties that involve HMRC, there is only one to deal with them. Directly. Do not hesitate to contact them. The staff consists of trained professionals whose job is to serve and help you.

Paying HMRC

If you have received a notice that says you owe funds, get in touch with HMRC as quickly as you can. If that bill is ignored and remains unpaid, HMRC will take necessary steps to recover the money.

The letter they send will contain contact information. This will be the HMRC office that’s handling your case. Give them a call. Explain your situation. Be as honest as you can. You don’t have the money. You can’t pay. You can’t pay right now. What you might be able to pay. When you might be able to pay.

The representation will assess your circumstances. They may take some personal information to briefly investigate what you’ve told them.

One thing they will not do. They will not dismiss you out of hand. With as much patience as feasible, HMRC will do whatever they can to work with you to resolve the issue. That is not only the practical path, it is the most logical financial and productive one. It makes no sense to involve magistrates and courts and potential high fees and time that will come from such actions. It makes far more sense to work something out with you personally.

Once the HMRC has assessed your situation, agreeing that at this point in time, you really don’t have the means to pay your bill, they will do what they can to alleviate the burden on you. They’ll possibly offer extra time to pay.

More likely, they’ll offer an agreement. This would mean an arrangement where you’d pay off your debt in installments in agreed upon amounts by certain agreed upon dates. In the rare occasion that HMRC says no, they could take legal action against you. This would only happen if:

-You haven’t kept up payments on previous agreements.

-The bill is delinquent because you’ve made no attempt to pay or contact HMRC about this debt after past contacts.

-You refuse to accept any agreement.

Don’t assume you’ll send HMRC something come next pay cheque and there’s nothing to worry about. If you plan to do that, contact them and let a representative know. They will still likely try to negotiate an agreement with you. They have to. It’s their job to record the fact that you’ve agreed to pay the bill in full.

Remember, the longer the debt sits unsettled, the greater the fees and penalties accrued. There might be the possibility of decreasing these, or at least slowing them down. That will not happen if you choose to remain mum about the whole thing.

Not Paying HMRC

No agreement is reached, or you don’t keep up the payments or you simply do not contact HMRC about your debt. HMRC has a number of options that they can deploy.


This is the seizure of property to compensate for the fact that a debt is owed and has not been paid. This is a procedure used by landlords and other debtors. In a lot of cases, prior court approval is not necessary. A representative of HMRC will come to your home or business. They will discuss the debt, which by this time will be quite delinquent. They will ask you to pay the bill. If you cannot, or won’t, pay, they will list your possessions on a form. They will not list items that are needed for day to day living, like refrigerators and stoves, or essential tools of a trade that would effectively stop the business from functioning properly. If you sign the paper, they won’t take anything away. Signing is an understanding that you have an additional five days to make payment. If you choose to not sign, the five days will still be in effect, but HMRC will have the option to remove your property on the spot. These items will be taken and auctioned off to pay your debt and any distraint costs. That could include moving and storage fees. If your property is sold for more than the total of your debt, HMRC will give you the difference. If the property is sold for less than what you owe, you will still be obligated to make up the difference, unfortunately leaving you even worse off than where you started.

Legal Proceedings

If any debt up to £1,700 or less has been owed for more than a year, HMRC can file papers with the magistrate’s court. A summons will be issued and sent to you. It will detail what you owe, as well as when and where you should show up for the hearing. If your debt is paid off before that hearing, you will not have to go. If you contact HMRC and come to some sort of agreement — remember, this is now considered a delinquent debt, so do not be surprised if they’re resistant — you will not have to attend the hearing. If you disagree with the amount and want to have your voice heard, contact HMRC. The hearing is not for determining whether or not you owe the money. They will not settle arguments concerning the amount or circumstances of your bill. The magistrate has the power to order you to pay the bill plus costs to the court and HMRC. If you continue to not pay the debt, the magistrate can send bailiffs to your home for the removal of your possessions.

HMRC could also start court proceedings. You will receive a claims form and an information package. It will explain what your options are in this matter. If you pay the debt, any legal proceedings will cease. If you cannot pay straight out, you’ll have 14 days to give a date by which you can pay or come to some sort of installment agreement. If you dispute the amount owed, you will have the option to state this on the form. You will likely have to attend court to argue your case. If you simply don’t respond to the court or not pay what you owe, the court will immediately order that all bills plus court fees be paid. The details of your matter will be filed with the Register of Judgments, Orders and Fines. This will have a dramatic effect on your credit line. There could be difficulty opening a bank account or borrowing money. If you pay your debt within one month after the court judgment, you can request the entry be removed. (Take note that Northern Ireland and Scotland have different court procedures for this matter.)


Any of the above actions could be financially stressful. They could lead to bankruptcy, loss of home, business, vehicles, investments, savings, etc.

A statutory payment demand will personally be served on you at your home or business. If within 21 days, you haven’t paid or agreed to settle, a bankruptcy petition will be filed with the High Court.
This petition will be served on you at your home or business.

You’ll require a solicitor. They might be able to get the hearing adjourned as all parties discuss settlement terms.

If you cannot pay, the court can initiate a bankruptcy order. A trustee may be appointed to evaluate your assets to cover debts and bankruptcy costs.


If you receive notice from HMRC, it’s best to contact them immediately. The alternative(s) are stressful and potentially disastrous. Taxaid, a charity for people with low incomes, is ready to counsel you (0845.120.3779, 10 am to noon, Monday to Thursday). There’s also the Citizens Advice Bureau. Their number can be found online or in the telephone directory.


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